Posts Tagged ‘lump sum’

We found our perfect first home. The price is $59,900 (we live in a small town in Pennsylvania so that’s really good for the 3 bedroom newly remodeled home). They give us the option of buying it outright or do a rent to own thing that uses a balloon payment. The man selling emailed me and stated that payments vary from person to person and that it depended on what we wanted out balloon payment at the end to be. My question is, we want our monthly payments to be anywhere from $300-$400 a month so we dont go completely broke once bills are paid. So should we take out a loan and buy it for the asking price or take the balloon payment? And if we take the balloon payment how many years/months do people usually pay for before they have to pay the lump sum? And in doing the balloon payment, is there still a down payment, closing cost…all that? I am completely illiterate when it comes to buying a home so I want to make sure we dont get ourselves into something we cant do.

Answer:
If the house is 60,000 with a FHA loan of 3.5% down, your payment for a 30 year fixed rate at 5% should be 300 a month PLUS taxes, insurance and PMI of another 100 (estimated). So your total monthly payment would be around 400. TOTAL CASH NEEDED: 2,100 for downpayment and around 1,800 for closing costs. You must pay the 2,100 downpayment from your own pockets. But the seller can pay the closing costs. This would be the BEST way to buy. If you don’t have the 2,100, you can’t afford to buy the house. Under a rent to own, you could be paying into the down payment and the seller stops paying the mortgage, YOU LOSE EVERYTHING.