Subject: Wholesale NFL Jersey
Author: xiaoming
Posted on: 08/15/2016 12:50:42 AM
锘? RATE SHOPPING
Most people will check the Internet or pick up the newspaper to look up current interest rates. What you see isnt always what you get. Unfortunately Cheap Jerseys Wholesale , there are many ways to get hurt when shopping for the best rate:
Short Pricing It is not necessary for lenders to state the lock-in duration when advertising a rate, so while a rate may sound good, it may not allow enough time for you to close on your loan. Most people dont ask how long the quoted rate is guaranteed for so make sure you do!
Low Ball Pricing Some companies will lure you into a mortgage application with promises of a low rate, only to have the rate changes for the worse just before closing. They may tell you your rate has expired or that the program is no longer available, or they may even delay the closing to break the lock. It is not nearly as important to shop rates as it is to shop for a reputable lender.
Products With all the different products and options available, borrowers need a good mortgage professional to help choose the right one that will best suit their needs and goals. After all, a mortgage is typically the largest financial transaction people make in their lifetime. It is far more costly to get the best rate on the wrong product that it is to get a competitive rate on the right program for you.
POINTS vs. NO POINTS
So youre in the market for a mortgage. After hearing about all the options and products, your head is probably spinning. If that werent enough, after you pick your mortgage, you then have to decide whether to pay points Cheap NFL Jerseys , and how many.
What is a point, anyway? Points are prepaid interest. One point equals one percent of the mortgage amount. One point on a $200,000 mortgage is $2,000.
People are often tempted to pay points because it will reduce their interest rate. And why not? If it saves you money in the long run, then it must be good. But in the real world, it usually doesnt work out that way.
Lets look at an example: You take on a $200,000 mortgage with a 30-year fixed rate. Your lender offers 8 percent with no points, or 7.75 percent with one point, or 7.50 percent with two points, and so on.
Generally Cheap Jerseys , one point equals a quarter of a percentage point. Its not a hard and fast rule, but it usually works out that way.
The 8-percentzero-point option equates to a monthly mortgage payment of $1,467.
The 7.75-percentone-point option equates to a $1,433 monthly payment, but with $2,000 paid up front.
So your choice is: save $2,000 now, or save $34 each month going forward.
Its quite natural for you to make a few quick math calculations: $2,000 divided by $34 equals roughly 59. So 59 months (nearly five years) from now, the point you paid will pay for itself.
This is probably how some mortgage bankers will explain it to you. In turn Wholesale Jerseys Cheap , you might respond by saying: I plan to live here more than five years, so the point makes sense. That can be a big mistake. Worse yet, its the kind of mistake that goes unnoticed. The simple calculation is flawed; thats the whole problem. This is one case where simplicity isnt good.
Heres why. The question really boils down to how you can best use that $2,000. You can pay a point, you can invest it, you can pay down other debt, or you can put it toward a bigger down payment on your house. If you plow it into the down payment, now you have a mortgage balance of $198,000. This changes the original choice you were faced with above. Now the choice is:
The 8-percentzero-point option gets a monthly mortgage payment of $1,452 with the lower starting balance.
The 7.75-percentone-point option equates to a $1 Wholesale NFL Jerseys ,433 monthly payment, but with $2,000 paid up front.
So now your choice is: put the $2,000 toward the down payment, or pay the point and save $19 each month going forward. Now when you do the quick math: you will divide $2,000 by $19 and come up with about 105 months, or nearly nine years. This isnt quite the no-brainer the previous decision was.
The average family changes residences about every nine years, according to the National Association of Realtors. And first-time homebuyers move frequently. The Mortgage Bankers Association says the typical homeowner refinances once in nine years. All this brings us to the average life of a mortgage, which is less than five years. So, more often than not Wholesale Jerseys , borrowers will find themselves with a new mortgage before one point pays off.
The case for avoiding points is even more compelling when you refinance a mortgage. Thats because the tax treatment is less favorable. The points paid on a first mortgage when you purchase a home are fully deductible on your federal taxes that year. Thats one of the selling points of points to begin with. But on a refinance, you must amortize those points over the life of the loan.
Lenders love to take your point money. But you should keep it and put it toward a sure thing, like cutting your loan size.
PRE-PAYMENT PENALTIES
Watch out for pre-payment penalties. I don't like prepayment penalties under any circumstance and would do my best to avoid them. If you are getting a great deal on a loan that has a pre-payment penalty, try to keep it to a one-year period. Additionally, make sure it's a "soft" pre-payment penalty. That means there is no penalty if you sell your home, and you can reduce your principal up to 20% per year. The only time you pay the penalty with a soft pre-payment penalty is if you refinance. Still, there are so many options out there, why be stuck with a lemon like a pre-pay?
NEGATIVE AMORTIZATION
Negative amortization is when the loan balance increases rather than decreases. This is a dangerous game and is offered in exchange for Supermundane Series: The Types of Min.
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