Author Topic: Down payment assistance program worth it?  (Read 963 times)

thorbjorn88

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Down payment assistance program worth it?
« on: March 27, 2017, 03:59:15 PM »
I've been trying to do some numbers on a down payment assistance program. Basically, they'd provide a 4% downpayment and an FHA loan at 5%. I've plugged this into a spreadsheet to compare with a standard FHA at 3.79% (with 4% down) which is what my credit union is currently advertising. Assuming PMI is the same I've divided the down payment amount by the difference in monthly payment to get a break even point of 4 years 10 months.

I plan to live in the property a few years (a duplex) then probably refinance the loan into a traditional investment loan and take out a new FHA on a single family home to move into while renting out the duplex.

 Am I missing anything? Do you think it's wise to do the down payment assistance program if I refinance after about 3 years? Is there a better strategy for moving out of the duplex into a single family while renting it?

NoNonsenseLandlord

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Re: Down payment assistance program worth it?
« Reply #1 on: March 28, 2017, 06:53:01 AM »
Free money is always good.

In this case, just work out the monthly payment.  Choose the lower one.  If you refinance after 4 years and 10 months, you are ahead if you can refinance lower.  If rates are higher, maybe not.  That may be just straight line comparison, not a NPV comparison.

Your down payment is not much different between the programs.

thorbjorn88

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Re: Down payment assistance program worth it?
« Reply #2 on: March 28, 2017, 08:57:03 AM »
Thanks for the input!