ZeroDown is constructing a new path to home ownership

techcrunch.com

2 points·Chazprime··3 comments

Doesn't sound like a great deal for the end customer. Here's a breakdown for an example home of $1M

With zerodown:

Maximum Home value: $1M | Maximum Monthly payment: $6,700 (includes Home Owners Insurance and property taxes) | One time payment: $10,000| Total payment over 5 yrs: (6700 x 12 x 5) + 10000 which is $412,000

Net equity after 5 yrs: 90000 - 10000 (initial one time payment) = $80,000

With a traditional mortgage (https://www.nerdwallet.com/mortgages/mortgage-calculator/cal...):

Assuming same down payment of 10,000 (assuming the banks allow it?) Home value: $1M | Monthly payment: $6,119 (includes PMI and Home Owners Insurance and property taxes) | Down payment: $10,000 | Total payment over 5yrs: (6119 x 12 x 5) + 10000 + 29,063.56 (approximate closing costs) which is $406,203.56

Net equity after 5yrs: $92,774 + 10,000 (towards downpayment) = $102,774

Zerodown would mean you own 22.15% less equity than traditional mortgage assuming the home sells at the same purchase price

I mean of course there is some trade off...the question is whether the trade off makes sense for you.

The comparison doesn't make sense because there's no traditional bank that would let you buy a $1m house with a $10k down payment.

Agreed, but 22% difference is a lot. Also, my only issue about the article is about the source of money for ZeroDown; it does not mention anything about this 22% difference and the PMI difference that the company can pocket if comparing to people putting 20% down

From the article: ZeroDown earns money from its $10,000 price tag and through a 24/7 concierge service it provides to customers. It’s partnered with Sheltr to connect ZeroDown users to services they might need as homeowners, including a babysitter or a plumber, for example

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