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Lessons When Making a Down Payment

Take our advice very seriously

All that Mikhail Prokhorov wanted to do was invest in a villa in Nice, France worth $500 million. That’s not so much of a pocket burner considering that he’s a billionaire who just owns the New Jersey Nets. And yes, he happens to be Russia’s wealthiest, owning the country’s largest producer of gold.

On the other hand, Lily Safra, the owner of Villa Leopolda, just wants to sell her property the right way. In other words, the buyer must keep true to the contract when he buys the villa originally built for King Leopold II of Belgium.

So Prokhorov paid the $53 million deposit so he could add the 22-acre estate to his collection. All’s well except that after his business suffered a heavy beating by the recession, he decided to get back his money of what could have been Forbes Magazine’s priciest real estate deal record. Safra, refused to give in to the Russian’s request. It’s not that Prokhorov’s drowning in penury with her decision but it would have been anybody’s reaction had they paid such huge sum for a property.

But a court in Nice recently ruled that Prokhorov won’t recover his 10 percent deposit back because French laws don’t permit any real estate deposit return.. His lawyer wants to appeal but the documents are all legit so there’s nothing that seems to be much expected out of it. The Times writes, “The deposit is to remain in the hands of the owner, Lily Safra, 71, the widow of Edmond Safra, the banker billionaire who was murdered by his male nurse in Monaco in 1999. The court also awarded Mrs Safra $2.3 million in damages. She had been forced to lay off the 27 guards, gardeners, servants and cooks at the villa. They have since been re-engaged. Mrs Safra said that she would donate the money to ten charities, including $1.5 million each for neuroscience research at King’s College London and Imperial College London. ‘By transforming the deposit into an act of giving I would like to encourage all who can do so to support medical research, patient care, education and other humanitarian causes,’ she said.”

Talk about income redistribution.

Well, not everyone can pay $53 million just for deposit alone. So here are some tips for you to be wise when paying the down payment.

Be careful on what assets to sell just to make your down payment. When things don’t turn out the way you want them to be, it’ll be tough to regret on how you sold your antique collection without thinking twice about it.

Limit your standard of living to a point that your sacrifices won’t alter your comfortable state a lot. Have you met a father who’s ready to cut back on his kids’ education just so they could move in a bigger home? Sounds not a good decision to me.

Just because someone is willing to lend you money, doesn’t mean you could keep paying the monthly mortgage. Keep in mind that the down payment can never make you own a house right away. It’s as simple as that.

Jumbo loans require hefty down payments so you better watch out.

A bigger down payment will surely reduce your monthly mortgages but remember too that the first few payments you’ll make for your mortgage are actually tax deductible. Keep your decisions smart enough.

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