See how the INVEST mortgage works through these scenarios*
*The above scenarios are for illustration purposes only and are based on hypothetical examples. Your circumstances will be different, and you should consider the impact of an INVEST mortgage based on your circumstances. Prior performance of real estate or savings investments is intended for informational purposes only. Future performance may be very different, and there is no guarantee that an investment in real estate or the stock market going forward will match or be similar to historical performance.
Current Situation: Couple is renting a 2 bedroom appartment in Los Angeles for $2300/mo., but would like to buy a home listed for $500,000
Scenario 1: Home Appreciates...
..in 10 years, you will have $262,000 in equity while ALSO saving $53,400 in a tax advantaged account
Final Home Value (10 years later): $740,000 ($240,000 gain)
Outstanding Mortgage Balance: $344,500
OWN Equity: $147,000 ($72,000 = 30% of the gain + $75,000 repayment of investment)
Your Home Equity: $262,000 ($168,000 = 70% of the gain + $25,000 initial down payment + $69,000 mortgage paydown)
IRA Balance: $53,400
Real estate grows 4% annually (historical average)
INVEST account grows at 7.2% rate (historical average)
You're renting a 2 bedroom apartment in Los Angeles, CA for $2,300/month.
You're interested in buying a 3 bedroom home in the same area that is listed for $500,000, but only have $25,000 to put towards a down payment.
Take out an INVEST mortgage for $413,000 (includes origination fees):
OWN invests $75,000 (providing a 20% combined down payment)
New monthly mortgage payments = $2,094 (based on a 4% annual percentage rate)
Contribute the monthly housing savings of $206 toward an IRA savings account (OWN matches 50%)
The following three scenarios outline your financial situation in 10 years depending on whether real estate appreciates, depreciates or stays the same.