$600 is all the government decided was needed for US citizens going through this pandemic when so many other governments are providing so much more for their citizens. So we're not going to harp on that. But what I wanted to do was use this as an example, to show you a $600 stimulus check that can help you buy a home?
The answer is yes because we're going to use this as kind of a tool to explore creative financing options that you have available to you. We're going to sprinkle in a mix of, you know, some fun names just to keep things a little bit light-hearted. So I don't know if you have ever seen the ad on health centers where it says, you know, wife, $600 stimulus check husband, $600 stimulus check, budgets $3.2 million. I feel like every time I watch HGTV, it's like the husband's a butterfly catcher and the wife draws with crayons for a living and their budgets, like $4 million. I don't know what these people are doing. So $600. It's a stretch, but we're just using this to illustrate creative ways to purchase a home.
We also have to keep in mind, creativity. Doesn't always work in a seller's market. Creativity with financing typically works really well, in a buyers market. Also, this is about if the stimulus check comes and when. Right now it's still undecided, would it how much it's going to be when it's going to come, who it's going to go to? So again, this is all just for illustrative purposes.
So what we're going to do is three homes with three loan scenarios, all for $600 total or less. And at the end, I'm actually going to show you a home that you can buy for about $1.4 million. All with $600 brought to the closing table. These are all with traditional loan programs. There are no weird gimmicks or grants in here.
This is meme is from one of my favorite shows. It's incredible, but I mean it's nine months of rent Michael, how much could it cost? $600? I think it's a perfect illustration of how insane it is for the government to say there are 600 bucks that will get you to buy a house. How long would that last, you know, nine months for you? It's it's ridiculous.
So first home here, this is in Beverly Hills, Florida, but we're going to explore here. First is a hundred dollars down FHA loan program. So FHA has a loan program that you can do a hundred dollars down on HUD REOs. That means there were foreclosures. They're now owned by HUD and are represented by a seller's agent.
So this is for $179,000. We can take a look here at this home, this is not the nicest home, not the prettiest home, but, still certainly can, you know, we can do some work on this. We could actually do a two or three K loan or rehab loan to fix it up the way that we want it put in a nicer kitchen, you know, put a new flooring, new paint, things like that to make it a little bit nicer.
A hundred dollars down. That's the FHA HUD REO program.
I'm going to estimate somewhere around $6,500. These are things like taxes, insurance, appraisal standard closing costs you run into on every loan. Now on this, what we can actually do is negotiate for the seller to pay for a portion of our closing costs and in this case, we're going to have them cover most of them with FHA loans, we can ask for up to 6% of the purchase price towards closing costs. So in this instance was for 3.35% gives us $6,000. So we can see our down payment plus closing costs minus a seller credit gives us a total of $600. So we could purchase this home actually with an FHA two or three K finance, the repair costs. So for only $600 brought to the table, we could put in a new kitchen, new bathroom, new flooring, new paint, new. We could maybe upgrade landscaping a little bit. We can do all of this stuff for $600 upfront.
You all, probably don't know this, but the tiny little pocket in your jeans is for your second stimulus check. I've always wondered what that pocket was for. It looks like jeans manufacturers were looking out for us a little bit earlier.
So before we jump into a house, number two, let's go ahead and have a CalmMoment. So when we have pandemics like this, it creates so much stress and hardship for people. You might be extremely financially impacted, or you might not be even financially impacted at all, but you're still in during the hardship that's coming from the pandemic and all the changes that are happening. And the first offense that we tend to go to is that of frustration. We tend to vent, right? That's our first response.
Our first defense is to vent and to show our anger or frustration to say, this is rigged. Nothing is working for me, but if we dig a little bit deeper, we can recognize those two things going on.
There's number one, there's there can be shame about the situation that we're in, right? We're getting taken advantage of things that are happening outside of our control. And we feel that shame internally.
Also, we have the anxiety of, we don't know what's going to happen in the future. And we feel like we don't know what's going to happen in terms of our ability to provide for ourselves and our family.
Not only that, but when we voice our complaints over and over and over again, and we feel like we're not being heard, we begin to feel like we're being taken advantage of, right. We're being taken advantage of an employers because of how they're choosing to operate in this pandemic. We're re we're being taken advantage of, the government because of the fact that they're supposed to be there as support in exact times like this, but we're seeing money being given more to corporations and larger entities rather than individuals.
And what's really going on that core emotion underneath is the anger and frustration that things are entirely out of our control, that things aren't going the way that we want, that we might not be the provider. We might not have the ability to be the provider that we need to be for ourselves and for our families.
So many people are counting on us, but so many things are out of our control and we can recognize them. That, that anger and frustration are beneath the rest of the shame and the anxiety and the venting that we're doing.
Then that's where we can move into a place that has more calm, more openness, more clarity to actually make decisions moving forward in processing that anger helps you move more into a space where you can collaborate with the ideas that you have and collaborate with other people to set up a plan. That's going to help you move forward. Even if it's the one that you don't want. When we can recognize those emotions that are deeper down, that's when we can actually make a plan. That's going to make sense again, it's probably not the one that you want. It's not the one that you plan for nobody planned to be in this situation that we're in right now, or to have the lack of support that we have right now.
But when we can process that emotion recognize it's beneath it, honor it validate it, feel how it feels in our body. Then we can see that emotion past just like a wave, then we can move into something that's more collaborative moving forward. We can find a plan that works for us and our family. So we can move back to that provider space that we have so much longing for, that people are depending on us for. Recognize what's happening.
Those are the defenses that we're creating this venting. Then underneath that, we have this anxiety, this shame, this frustration, this anger, this fear when we can honor those validate those, those are going to push us into a more calm space moving forward.
The second-home option is USDA, and we're going to do a special feature of USDA called a closing cost wrap. We'll actually take the closing cost, bring it back into the purchase price. So here's how this works.
This home is listed for $245,000. You can see this is a pretty nice home in Kaufman, Texas. We got three beds, two bathrooms. This is a really nice at home that we could purchase with USDA. It's in a USDA-eligible area. We do have to watch out for some of the other USDA qualifications, like the income limit that doesn't come there. But overall, this is going to be a great house that we could look at purchasing.
Now what we're going to assume in this scenario, and obviously this won't work for every single scenario. Is it listed at 245, but we're going to assume it actually is going to appraise for 252 to 900. So it's actually coming above the sale price with its appraised value. What's cool about USDA loans, we can make any difference between the above appraisal and the sale price and push closing costs. We push closing costs into it.
So the down payment would be $0. USDA does 0% down closing costs. We're going to estimate 8,000 again, that's taxes, insurance, preschool, all of that jazz in there. Then we appraised above the purchase price by $7,900. That means we can take most of our closing costs, $7,900 of our closing costs, and wrap them into the loan amount, giving us $100 due at closing. So we're a hundred dollars total. We can purchase this home here in Kaufman, Texas.
Let's move on to the third one. The third one is the biggest example that we have here. So this is a VA Loan, and we're gonna actually use retirement money as a loan to fund some of our closing costs.
1.4, $5 million and you see this as a super nice house. Again, we can purchase this for $600 or less using creative financing for beds. Four baths in San Ramon, California.
The down payment is $0. VA loans have 0% down. You do have to be a veteran to qualify for them.
We're going to estimate $12,000 with taxes and all of that in there. Then what we're going to do is we're going to take a loan out of a 401k for $11,400.So take a loan against the 401k use that does not count in our debt-to-income ratio. And that's going to bring us to a total of $600 cash due at closing to purchase a 1.45 million dollar home. Again, these are all just for illustrative purposes.
For some people, these will actually work really well for others. It might not work right for you. You might not be a veteran. So that for instance, that program is not going to work for you. And obviously, this pandemic and the lack of stimulus and lack of support from the government are causing huge hardship and headaches for people.
So this discussion in no way is to undermine the struggles that so many people are going through. It's mainly just a tool to help you understand a little bit more about how loans work.
Because for most people, you're going to be putting a down payment down. You're going to have to figure out a creative solution to fund your closing costs, but you might be able to explore if you have the knowledge and the tools available to you, explore ways to keep those costs as low as possible if you don't have the cash. To front-end for that specific home.
Ask us a question →
