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young woman and her new home with colorful shapes

Move-up homebuyer turns moxie into money

By Julie Tramonte

November 2020

Jocelyn is a determined Hispanic woman who knows exactly want she wants: To build financial wealth through homeownership. Here’s the story of how she moved from her first home to her second home, making smart decisions about down payments and building equity along the way.

Chapter 1: Becoming a homeowner sooner

3 years ago, the L.A.-based mortgage professional was on the cusp of making her dream of buying a home – before she turned 30 – a reality. She was single, 28 years old and wasn’t going to let a little thing like not having a 20% down payment stand in her way. 

Her parents, like many people, felt she should hold off until she could save for a larger down payment. But Jocelyn had other ideas. 

“I did my homework and knew using mortgage insurance (MI) would allow me to make as low as a 3% down payment,” she explains. “I bought my townhouse for $278,000 and put down $13,900. It would have taken me almost 8 years to save $55,600 for a 20% down payment! As it was, my 5% down payment used up most of my savings.” 

Chapter 2: Taking advantage of an equity boost

Fast forward a few years and her decision paid off. Due to low interest rates and increased demand for housing, her home had appreciated significantly. In March 2020, she sold her townhouse and made an $86,926 profit.

“Imagine if I had waited 8 years to save for a 20% down payment!” marvels Jocelyn. “I wouldn’t have been able to get my foot in the door of homeownership when I did.”

Chapter 3: Using her profit wisely when buying her next home

The sale of her townhouse allowed Jocelyn to move up to a much larger house in a gated community in Simi Valley, CA. Typically, when buyers like Jocelyn move up, they have enough equity or profit from the sale of their previous home to put down 20%. 

Relying on her experience as a loan processor and mortgage insurance employee, Jocelyn chose to buck that trend and use mortgage insurance as a financial tool again.

She purchased her second home this spring for $537,500, and despite having enough money for a 20% down payment, Jocelyn put down 11%, or $60,000.

“In my last house, I cut myself short by using almost all my savings for my down payment,” Jocelyn explains. “I didn’t want to do that this time around. I knew my new house needed some repairs and updates. Plus, I was purchasing it during the uncertainty of the pandemic, and I wanted to have ready cash in case I lost my job.”

Her decision gave her the financial freedom to remodel her kitchen, buy furniture, pay off 2 credit cards and still have savings left for a rainy day.  

Chapter 4: Another equity boost

In addition to having a bigger house in a better location, Jocelyn feels she made another great investment. She reports that 4 neighborhood homes like hers recently sold in the $550,000 to $560,000 range, most likely increasing her equity by $17,500 in less than 6 months. In fact, she may soon qualify to cancel her MI

“I try to educate people about all the tools and resources available to homebuyers,” says Jocelyn. “I tell them, ‘I’m living proof.’ Had I waited those 8 years to save for a 20% down payment, I would have missed out on all this money and the perks of being a homeowner!”

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Julie Tramonte is a writer who joined MGIC in 2018. Prior to flying the coop, she wrote for a mattress company, a manufacturer and advertising agencies. She’s obsessed with reading, traveling, tennis and rearranging furniture. Mother of 2 beautiful, adult daughters. Empty nester toying with downsizing. Her guilty pleasures are doughnuts and the Kardashians (don’t tell anyone).
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