 |
|
|
Debbie Siegel's Mortgage Minute
Some Points About Points
"Does the rate include points?" This simple question is a key element in
determining which lender is offering you the best deal on your mortgage.
Points are easily calculated - one point equals 1% of the loan amount. If you
are buying or refinancing a home with a $360,000 mortgage, for example, one
point equals $3600.
Each point serves to lower the interest rate of your loan. However, the points
are paid up front at closing, meaning you pay more for the deal at the
beginning. Today's lenders offer a plethora of point/rate combinations.
Consider this simple example. If the loan amount is $360,000, at a 6.75% rate,
your monthly payment would be $2,335. If you pay one point ($3,600), your rate
may decrease to 6.5%. This would lower your monthly payment by $60 to $2,275.
* Next 37 17 investors only!
Is it a good deal? Well, in this case, it would take you 62 months ($3,600 /
$60) to break even on the up front payment. If you sell or refinance the
property before the 62 months are up, you'll end up paying more overall than if
you had simply paid the extra $60 each month and not paid the points.
Another consideration is cash flow. For many people, cash is at a premium when
buying a property, and by paying points up front - even though it lowers your
monthly payment - you won't have access to that cash as unexpected costs arise.
In that case, you may be wise to pay a slightly higher rate, but keep the points
in your pocket.
Whichever path you choose, remember that whenever you are quoted a mortgage
rate, it is absolutely essential to ask if the quoted rate includes points (and
if it does, how many). Only then can you decide if it makes sense to pay them.
Got questions about real estate financing? Contact
Debbie@westchester-mortgage.com
or 617-965-1236. She'll consider them for
inclusion in a future column. Debbie Siegel is president of Westchester
Mortgage in Newton, Mass. She is licensed in several Northeastern states.
Did you like this article? You May Also Like:
 |
Feature Article: Three Common Mistakes New Investors Make - And How To Avoid Them
Sheila Farragher-Gemma, ForeclosuresMass, Corp.
Success in real estate investing requires a commitment to keeping emotions out of the picture. Anyone who has plunked down hard-earned savings or leveraged their good credit to fund a real estate investment...
|
 |
Investor Interview: The Reason Why I Do This!
Michael Ouellette
For Mike Ouellette, making money isn't the only answer, and it can be one of the biggest mistakes investors make when getting into the foreclosure market...
|
 |
Feature Article: Three Steps to Rebuilding Your Credit After Foreclosure
Stephen R. Elias, Attorney
Gone are the days when rebuilding one's credit history after going through bankruptcy or foreclosure was straightforward. With the crash of the sub-prime lending market, consumers are under intense scrutiny when applying for mortgages and credit cards, which means rebuilding credit can now take three to five years - or longer!. In his article, bankruptcy attorney and author Stephen R. Elias provides three key steps that you can pass on to your clients who need advice on how to recover from foreclosure.
|
 |
Finance Corner: A Good Fit: Real Estate in Your Investment Portfolio
Christopher P. Gullotti, MSFP
Financial planners hear comments about real estate investments frequently. Does investing in real estate truly offer financial opportunities? Many times yes, but not always for the reasons people think...
|
 |
Success Strategies: The Top Three Fears That Prevent You From Making that First Deal
Kelle Sparta
If you've yet to close on your first deal, it could be that something is blocking you. According to author, trainer, and coach Kelle Sparta, people usually have the following fears when it comes to real estate investing: they think they don't have enough information, they're afraid they'll lose money, or they believe they aren't the real estate investing type. Read her article to find out how to conquer these common, yet debilitating, fears!
|
 |
Nothing Succeeds Like Success: An interview with full time investor, Derek Ebrecht
Derek Ebrecht
Derek Ebrecht's got focus, drive and insight into what makes for successful investing. He's also got several profitable deals under his belt, despite his relative newness to the foreclosures field. We spent some time with Derek this month to understand the reasons behind his success.
|
 |
Interview With The Expert: Richard Cohen
Richard Cohen, Negotiation Coach and Consultant
For any real estate investor, negotiation is a part of everyday life. Whether with tenants, contractors or homeowners, any time you are trying to influence someone else, you are negotiating. This month we speak with Richard Cohen, a negotiation coach, consultant and real estate investor, to understand more about this critical skill...
|
 |
Feature Article: How To Protect Yourself In A Lease Purchase Deal
James A. Gage
Lease purchasing is when a potential seller transfers control of and rents a property to a potential buyer, until the buyer exercises his or her option to purchase the property. The benefits to both seller and buyer can be significant, however there are any number of factors which can derail the deal along the way. Jim Gage offers 11 practical tips for keeping things on track to the finish line.
|
 |
Feature Article: 1031 Exchanges - The Smart Way To Buy Investment Property
Jack Cutone
1031 tax deferred exchanges are an IRS approved method for selling property and reinvesting in another property, all the while deferring federal (and most state) capital gains taxes. It's a terrific arrangement, but not without it's complications. 1031 expert Jack Cutone explains how it works and, as importantly, what's required to make it happen...
|
 |
Feature Article: Five Strategies for Successfully Negotiating Short Sales
Elizabeth Weintraub
As any seasoned investor can attest, dealing with banks on short sales requires a large bottle of aspirin and the wisdom of Solomon. Real estate broker-associate Elizabeth Weintraub gives you the low-down on how to successfully deal with banks - everything from dealing with confrontational bank agents and writing contracts to proving to the bank why you're the best buyer.
|
|
|
