Sometimes you will call a lender, and you will ask them about rates.
They may tell you that you can get a certain rate without "paying points." But, you can get a lower rate if you pay a certain amount of points. What do they mean by this?
When a lender refers to paying points, they mean that you can pay a percentage point of the loan amount to buy the rate down.
Is this beneficial?
Well, that is in the eyes of the beholder....I'll give you some examples.
Let's say that a lender says, "I can give you a rate of 4.75% if you pay 2 points, or I can give you a rate of 5.125% if you do not pay points." Your mortgage is worth $100,000. If you had a 30 year fixed rate, your payment would be $521.65 with a 4.75% rate. Your payment would be $544.49 with the 5.125% rate. Two points are worth $2,000 of your loan. It would take you over 7 years to recover that $2000.
So, you need to ask yourself....is having liquid money worth more to me right now? Or is having a lower payment by $22.84 more worth it to me?
There is no right or wrong answer. Everything depends on the person that is buying the home and getting a mortgage. Assess your goals, and you can decide what is the best way to go.
Friday, March 12, 2010
Monday, March 8, 2010
Some Basic Tips on Getting a Mortgage
Here are some basic tips on getting a mortgage:
1. You need to remember that you will not just be paying principle and interest. You will also be paying for: Property Tax, Homeowner's Insurance, maintenance, and possibly Private Mortgage Insurance. Add about 40% onto your basic monthly costs.
2. Gifts are a great source for downpayments! But, make sure that the person giving you a gift will sign something saying that it is a GIFT, NOT a LOAN.
3. Closing costs can cost up to 2 to 3 percent of your mortgage amount. Some of these costs can be rolled into the loan. In a buyer's market, the seller may pay for some of your closing costs, but be prepared to offer them more on the price of the home. Be prepared to pay closing costs no matter what.
4. Mortgage bankers and brokers will shop around for the best loan deal for you.
5. Set a price limit before you go shopping. If you should get into a bidding war, walk away once the price exceeds your limit.
6. Your home must pass an inspection, and it must appraise out at the amount you offer to pay. So, if you offer $100,000, and the home only appraises for $90,000, you need to go back to the drawing board and re-negotiate with the sellers on your contract.
7. Make sure when you are shopping around for your loan, that you are finding a company and loan officer that is easy to talk to and deal with. You don't want to be stuck in a hairy situation with someone who is unwilling to step up their game for you. You also want someone who will be honest with you, and who will not put you in a mortgage that you will be unable to afford.
1. You need to remember that you will not just be paying principle and interest. You will also be paying for: Property Tax, Homeowner's Insurance, maintenance, and possibly Private Mortgage Insurance. Add about 40% onto your basic monthly costs.
2. Gifts are a great source for downpayments! But, make sure that the person giving you a gift will sign something saying that it is a GIFT, NOT a LOAN.
3. Closing costs can cost up to 2 to 3 percent of your mortgage amount. Some of these costs can be rolled into the loan. In a buyer's market, the seller may pay for some of your closing costs, but be prepared to offer them more on the price of the home. Be prepared to pay closing costs no matter what.
4. Mortgage bankers and brokers will shop around for the best loan deal for you.
5. Set a price limit before you go shopping. If you should get into a bidding war, walk away once the price exceeds your limit.
6. Your home must pass an inspection, and it must appraise out at the amount you offer to pay. So, if you offer $100,000, and the home only appraises for $90,000, you need to go back to the drawing board and re-negotiate with the sellers on your contract.
7. Make sure when you are shopping around for your loan, that you are finding a company and loan officer that is easy to talk to and deal with. You don't want to be stuck in a hairy situation with someone who is unwilling to step up their game for you. You also want someone who will be honest with you, and who will not put you in a mortgage that you will be unable to afford.
Wednesday, March 3, 2010
Cute Condo in Webster
2 BDR/1.5 BA in quiet Webster Groves neighborhood. Recently updated kitchen with custom maple cabinets, granite countertops, and ceramic tile flooring. Private back patio with new privacy fence and balcony off the master bedroom. Walk-in closets in both bedrooms, updated bathrooms, and wood-burning fireplace. Covered parking included. Convenient to all major highways. Recently lowered the price to $159,900. If you want information on loans for this home, please call me at 314.878.7900.
For information on this home, call Amanda Winnick at 314.968.5446. They are having an open house on Sunday, March 6th from 1:00-3:00pm. Stop by and check it out!
Monday, March 1, 2010
Tips on Credit
I got these tips from Suze Orman. Love this book, Young, Fabulous and Broke. If you don't already own it, I suggest getting it.
1. Check your credit reports at least once a year to make sure there are no mistakes that could make your FICO score lower. You can get one free from each credit bureau at http://www.annualcreditreport.com/.
2. File a fraud alert with a credit bureau if you think you are a victim of ID theft.
3. Complete an ID fraud affidavit if your account has been stolen or "borrowed" by a financial criminal.
4. You can also check your FICO score on http://www.myfico.com/. If your score is below 760, there are things you can do to change it over time.
5. Pay your bills on time, even if it is just the minimum, to keep your FICO score strong.
6. Do not cancel your credit cards as a way to improve your FICO score. It may actually cause your score to drop.
7. Keep your mortgage shopping under a 2-week period, so your FICO score will not be negatively affected.
8. Keep a partner with a low FICO score out of the mortgage. If you are buying a home with a life partner or spouse, and one of you has a low FICO score, the partner with the higher score should apploy for the mortgage alone. That way, you will get a lower interest rate.
9. Pass down your FICO score to your kids. One of the best ways to educate your children on smart financial management is to send them off to college with a great FICO score and an appreciation of why that's a very big deal. Add a child to your card and they will inherit your credit profile.
1. Check your credit reports at least once a year to make sure there are no mistakes that could make your FICO score lower. You can get one free from each credit bureau at http://www.annualcreditreport.com/.
2. File a fraud alert with a credit bureau if you think you are a victim of ID theft.
3. Complete an ID fraud affidavit if your account has been stolen or "borrowed" by a financial criminal.
4. You can also check your FICO score on http://www.myfico.com/. If your score is below 760, there are things you can do to change it over time.
5. Pay your bills on time, even if it is just the minimum, to keep your FICO score strong.
6. Do not cancel your credit cards as a way to improve your FICO score. It may actually cause your score to drop.
7. Keep your mortgage shopping under a 2-week period, so your FICO score will not be negatively affected.
8. Keep a partner with a low FICO score out of the mortgage. If you are buying a home with a life partner or spouse, and one of you has a low FICO score, the partner with the higher score should apploy for the mortgage alone. That way, you will get a lower interest rate.
9. Pass down your FICO score to your kids. One of the best ways to educate your children on smart financial management is to send them off to college with a great FICO score and an appreciation of why that's a very big deal. Add a child to your card and they will inherit your credit profile.
Subscribe to:
Posts (Atom)