I have a lot of friends and clients who tell me they want to buy a house, but are saving up for a down payment. It’s counter-intuitive, but this approach can be costly. That’s why I make sure everyone knows about 100% financing from Utah Housing. 
100% financing means that you don’t have to bring any money to put down on the home. Utah Housing can finance your down payment as a second mortgage so you don’t need a down payment. The second mortgage would have a slightly higher interest rate than the first. With rates as low are they are right now, this might be a better option than waiting a year to save up for a down payment.
Here’s why:
Simply put… if interest rates increase by just 1%, your buying power goes down 12%! I know that’s some weird math so let me put it into dollars. If you can afford the monthly payment on a $200,000 house today, but interest rates go up 1%, that same payment will now only get you a $176,000 house. Saving $7,000 just cost $24,000.
Here’s another thing to think about: Property values.
Lately as the market stabilizes home values have started to increase again. In fact local property values increased by 7.3% last year. That means, if the trend continues, that same $200,000 house will be worth $214,600 next year.
If you combine interest rates and improving property values there could be a $38,600 decrease in your purchasing power. Could you save $38,600 in a year?
By financing your down payment now through a Utah Housing program you might be able to buy a larger home now then you could if you waited. You could then apply the extra money you were going to save for a down payment to the second mortgage and pay it off quicker. There is no pre-payment penalty with the Utah Housing loan.
This works for many of my buyers and is great for anyone that is tired of paying rent. Especially first time home buyers. If you want to know more about the program, give me a call and I can get you to an outstanding lender to get you pre-qualified.