If you are looking to buy your first home, then you owe it to yourself to check out the loans offered by the Federal Housing Administration (FHA). These loans can offer significant benefits designed to help you achieve the dream of owning your own home. Designed with first-time homebuyers in mind, the FHA has designed these loans not only... Read more
|
 |
||||||||
| Sign Up for a free account | |||||||||
In the simplest form, points are a onetime fee that is paid to a lender and are used to secure a loan below the current market interest rate. Each point represents 1% of the mortgage amount. So if you have a mortgage for $150,000 then one point would be equal to $1,500. A seller would pay points on a loan to reduce the interest rate of the loan which could potentially save them much more than the points cost up front over the life of the loan. Points are not always paid for by the buyer; they can sometimes be paid by the seller as well. A seller would typically pay for points when they are in a rush to sell the property or have been having a hard time finding buyers for the property. In this case it is used as an incentive to get the buyer to move on the property. There are times when it may not be in your best interest to purchase points. A rather simple way of doing this is to determine the payback period, or length of time it takes you to pay back the points you purchased up front. First, determine your monthly payment amount without points, and then with points. If you are paying $900 without points and $800 with points, your monthly savings is $100. Now take the total cost of the points, say 2 points on a $150,000 mortgage which would be $3,000, and divide the cost by the monthly savings. $3000/100 = 30 months. It will take you 30 months to realize your savings of $100 per month. For a 30 year loan, it would make a lot of financial sense to purchase the 2 points up front if you can afford them. Where you have to be careful with points is when you don't plan to be in your current home long enough to reach the payoff. You also have to keep in mind that the cost for points is above and beyond your down payment on the house you want to purchase as well. It can add significant up-front costs, which is why it is a wise move only if you plan on occupying the house for a long period of time and have significant cash up front to be able to afford it. One final note about points - they are tax deductible as they are considered prepaid interest. They are deductible by the buyer, even if the seller pays for them. Points are deductible fully in the year they are paid for a new purchase, and over the life of a loan for a refinance.
Insurance - we need it for our life, our car, our house, our health and yes, in some cases, even for our mortgage. Private Mortgage Insurance (PMI) is the mortgage industry term used to describe insurance that protects the lend... Getting a mortgage can be a very confusing process. There is a lot of paperwork to sign, documents to read and procedures to be followed. You'd think you were applying to go to Harvard or Yale, except they don't require that m... A red brick house and a white picket fence - long the American dream of many and in recent years more Americans have been buying their own dream in the form of their own home. Yet, for millions of us we don't have a real good u... Mortgaging your house is a big project. It might as well be one of the biggest investments that you are supposed to make. If you are in California and you want to invest in real estate you should spare some time for a California... Typically home refinancing is done when you have a mortgage on your home and apply for a second loan to pay off the first one. While taking the decision to go for the home refinancing option, it is important to first determine w... If you have poor credit, you might feel the journey is impossible. It is possible to get a credit card if you have poor credit, but it may come at a costly fee. In most cases, people with poor credit or current debt problems oft...
|
|
