| DOES PAYING POINTS MAKE SENSE?
Points are up-front fees paid to obtain a better interest rate on a loan. One point equals one percent of the loan amount. A lower interest rate may result in a lower monthly payment, but it is important to consider how long you intend to be in the loan, and to compare current rates to historical market trends.
If you take out a $300,000 mortgage and decide to pay one point, this translates into an up-front closing cost of $3,000. Paying a point up front saves $100 a month but it will take 30 months to recuperate the cost of that point. If you decide to refinance or sell the home before the 30-month mark, your money is lost. In this case, you would benefit financially by remaining in the home longer than the 30 months.
Rates run in cycles. When rates are at historical lows, it is sensible to pay points if you plan to live in the home for an extended period of time. It is unlikely that rates will go down; hence, there will be no need to refinance.
When rates are up, there is a strong likelihood that they will come down. This is no time to pay points. The chances of refinancing in the future are extremely high, and you will likely not be in the loan long enough to recuperate the cost of the points.
|Mortgage Interest Rates* CRAZY LOW!!!|
|Rates as of Saturday, 3rd December, 2011:|
For professional use only. Not intended for consumer distribution.
As you probably know, “piggy back” loans to avoid mortgage insurance are non existent and therefore homebuyers have no choice but to pay mortgage insurance when the down payment is less than 20%. What you may not know is that PMI IS tax deductable (see article below) which makes it more palatable.
Congress Makes PMI Tax Deductible
The federal government’s Private Mortgage Insurance legislation is great news for the real estate industry! Enacted on January 1st, 2007, the bill makes Private Mortgage Insurance (PMI) tax deductible for borrowers whose personal adjusted gross income is $100,000 or less. For millions of home buyers, the bill creates an amazing opportunity to finance a more expensive home or potentially obtain a lower payment for the same-priced home, while reducing annual income taxes by hundreds of dollars.
What is PMI?
It wasn’t until the 1990s, when lenders began allowing “piggyback” financing, that homeowners and home buyers had an opportunity to finance a home without PMI. Under this scenario, buyers would take out two loans to cover the total amount borrowed. The first mortgage accounted for 80% or less of the purchase price or appraised value of the home; and the second mortgage, or “piggyback”, covered the remaining amount required to fund the transaction.
It’s also important to remember that PMI doesn’t last forever. If a home appreciates at a rate of 4% annually, borrowers will be in a position to remove PMI within four years, resulting in an automatic reduction in the mortgage payment.
What to Do Now
If you would like to discuss how your clients can take advantage of the benefits of PMI, please call me! I would welcome the opportunity to speak with you.
Here is an e-mail with information of Do’s and Don’ts During the Process of Your Home Loan
Do you want a hassle free loan process? Here’s some Do’s and Don’ts to share with your homebuyers.
During the process of your loan request, we encourage you to follow these suggestions until all loan proceeds have been disbursed by the Lender. The Loan is officially completed once all monies have been disbursed.
MAKE SURE YOU DO…
Keep paying your bills on time including any mortgage, car, credit
Inform us in advance of any employment or income change.
Keep copies of all paychecks/stubs and bank statements you receive.
Call us anytime if you are unclear or have a question about your loan.
MAKE SURE YOU DON’T…
Change your employment status without notifying us first.
Apply for new credit or access credit lines
Start significant home improvements on your home (if refinancing)
Co-Sign any loans until finished with this transaction.
Make large purchases such as real estate, cars, or furniture
The above information is provided for informational purposes only. Nothing contained herein should be construed as legal advice. Should you have any questions regarding your legal obligations during the loan process, please consult legal counsel.
Carey Lance Hollander, NMLS #74044
108 Corporate Park Dr., Ste 301, White Plains, NY 10604
914-696-3400 Office, 914.424.5962 Cell
Equal Housing Lender/Licensed Mortgage Banker, NMLS# 1615/NYS Banking Dept.
I received some positive news today via e-mail. An article written in “Daily Real Estate News” through Realtor.org
Obama Promises More Low-Cost Mortgages…
President Barack Obama promised Saturday to reduce mortgage costs as a key part of his plan to improve the economy.
Analysts applauded the move, saying that making low-cost mortgages widely available could stabilize housing markets and jump start new home construction.
Beyond that, observers say aid for the troubled housing market will help blunt the anger many Americans feel over the financial bailout as the executives of firms that received billions take bonuses while average people lose their homes.
Source: Reuters News, Mark Felsenthal (01/31/2009)
Any positive news makes me happy for both my buyers and sellers. My buyerswill be able to possibly take advantage of these historically low interest rates and sellers may see more activity and possibly a SOLD sign in front of their home!
neoliminal – Flickr.com
ikkoskinen – Flickr.com
As I sit here in my den by the fireplace, writing another post for my Blog – which is turning out to be one of my favorite daily routines! I can’t help but think about all the comforts of a HOME. Being able to relax and enjoy homeownership is FABULOUS!
*clairity* – Flickr.com
During the winter especially, a HOME gives you warmth – and invites your family and friends during the Holidays.
A HOME is where memories are made and never forgotten. I still dream of my childhood HOME – over and over. I have friends and family that say the same – many of their dreams are also of their HOME, where they lived when they were a child.
alicepopkorn – Flickr.com
If taking steps toward HOMEOWNERSHIP is one of your NEW YEAR RESOLUTIONS – talking to a mortgage broker is an important first step! I highly recommend Anthony Frascone – cell: 203-648-6713. He is licensed in New York and Connecticut and has similar family and work ethics as I do. GOOD LUCK and HAPPY NEW YEAR!
My Holiday Wish to You and to All is that you and your loved ones be Healthy, Safe, Together, Happy and Financially Stable.
aussiegall – Flickr.com
Also, if your a BUYER, looking to purchase a HOME, my wish is that I help you find it!
H Dickins – Flickr.com
Interest Rates are DOWN AGAIN!! There are lots of homes to view and lots of negotiable sellers!
A very good friend of mine, Anthony Frascone with Wells Fargo, sent me some information for BUYERS and SELLERS in New York or Connecticut. Read more »
Most buyers tend to start their house hunting on-line through sites like REALTOR.COM, TRULIA, and many other sites. Then, they may contact a Realtor, possibly the listing agent to an interesting home they’ve spotted on line.
The next thing they know, they’re scheduling an appointment to view homes and one day, it happens…
They find “the one” – their dream home, their casa or castle. They begin to picture themselves, their furniture and belongings in the home. They may even start picking out paint colors and think of where to place the furniture – getting more and more wrapped up in becoming a homeowner.
Then, they contact a mortgage broker – since their offer, after negotiating, was accepted – Yeah! Or maybe not. What if that house’s monthly payment isn’t affordable – what if their credit scores have changed - what if they need a bigger down payment? These are all questions that could sometimes be answered with a simple phone call.
With all the changes in the Mortgage Industry, contacting a mortgage broker or lender is crucial. It will save you much dissappointment and give you peace of mind while shopping for your first or next home.
Call me for a list of fantastic people to assist you in any and all questions that you may have. For now, check out DML Mortgage’s Link. Paula Ventura or David Litchman are great!
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