I had a talk with my mom the other day and asked her some questions about money. How much I would need in order to get a good house or just one in general. This curiosity stemmed from a friend I have that said she is interested in buying a house. The thing is, does she really know how much it would cost her?
It’s funny how the whole conversation started with a text to the wrong person. That person was me. Fitting that I would have that happen to me from a girl since I haven't had the best luck with them in a while. Made it even greater that it was from someone I was friend-zoned by. Anyway. She told me she wants to buy this house. It costs about 300k and she told me the loan amount. Three thousand dollars for this house. I’m looking at my phone as if its playing tricks on my eyes. And to make it even more unbelievable it looked great! What kind of sorcery is this?
Now I will be going back to this story in just a second but what I had remembered at that moment was that my mom has aspirations of buying out the family’s house. I won’t get into much detail about that but when I asked her about that then I ended up being a messenger between her and my grandfather. I felt like I was in The Godfather movie. So she asked me what brings this up and I explained that my friend wants to buy a house worth 300k. Shouldn’t it be way more than a three thousand dollar loan? So then my mother explained to me that it should be around 20%. But I researched about FHA which to not be boring means that the government gives you mortgage insurance and a down payment would be 3 to 5 percent.
When I told my friend this she said its not that. But if its 3% percent of your mortgage its gonna be 9k. I’m no mathematician but I’m pretty sure that’s more than double that of three thousand. I had to be like that old owl in those lollipop commercials to make sure I was counting right.
One, Two, Threeeee
I went back to talk to my mother and ask her if its really only three thousand for this down payment. Mom then asked me if its a fixed mortgage. I had a very confused face at this moment. In my head I’m saying “What the heck is that?” If you know what that is don’t judge me. I wasn’t told. Not my fault.
Yea I know I could’ve looked up how to buy a house on YouTube but it didn’t crossed my mind many times. Mainly because I’m broke. And unemployed. So I have no reason to look up houses that will be taken before I get to see it in person.
The definition of fixed income was then talked about. I knew of loans that spiked throughout time but I didn’t know what it was called or that it had a good brother. Fixed income is mortgage payment that stays the same throughout time. No matter what happens in the economy. This is a win win situation. Being able to see a low price of mortgage rates and knowing its never going to change is like seeing a girl and God tells you that’s your wife. You don’t have to go searching anymore. You found the golden ticket. Not that I would call my wife a ticket but you know what I mean.
I then asked my friend-zoning friend if that is the deal that is placed for the house she is looking for. Low and behold it was. She knew already what it was. Now I see why I’m just a friend. The good news is not only is it possible that she will only have to pay three thousand dollars for the down payment of this house but that she would have a mortgage rate that will help her greatly.
The evil step brother of fixed income is known as ARM. Not your arm but the adjustable rate mortgage. Never get that. Its not solid. It can go up at any time then next thing you know you’re selling Mike & Ike’s on the street corner. Never sell those.
Now that I have taught you what I just learned, yesterday, do not take anything other than a fixed income. I don’t care if the mortgage starts at 5 dollars a month by next year it could be a thousand. Since we don’t control the state of the economy and the lack of jobs it is important to make sure you have a rate you are able to pay every month and not worry about what could happen in the future. Do not let your money vanish into thin air because something starts very easy without you looking up the fine details.