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| Points: Pay Now or Pay Later |
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Usually, when you hear mortgage rates
advertised, the number to which you pay the
most
attention is the interest rate. You may
occasionally
hear about "points," but it's that magic
interest rate that
is central in people's mind. However, points
can be a
very important part of your mortgage's total
picture.
They can save you a significant amount of
money over
the life of your loan, but only in certain
circumstances.
What is a point?
Paying a point allows you to lower your
overall interest
rate. For this reason, mortgages are often
advertised
as having lower interest rates, but include
points. You
might say it's a "pay now or pay later"
situation. If
you "buy" a point, it costs 1% of the amount
of your
mortgage and is paid at the closing. What
might a
mortgage with or without points look like?
- If your mortgage amount is $360,000
and you are
paying one point, you need to pay $3,600 at
closing,
above and beyond your other costs.
- A $360,000 mortgage with no points and
a rate of
6.75% will cost $2,335 per month.
- A $360,000 mortgage with one point,
which would
get you a rate of 6.50%, will cost $2,275 per
month.
- The difference between these two
payments is
$60. Therefore, it will take you 6 years and 2
months to
recoup the amount of money you spent on
the
point.
Figuring out if points are right for you is a
pretty
straightforward equation, and requires that
you ask
yourself two very important questions:
- How long will you be in the house?
It is
certainly
not worth paying points on a home you only
play to
stay in for a couple of years. The example
above does
not allow for any actual money saved until 6
years into
the life of the loan.
- Do you have the money? If you
are
scrambling just
to get the down payment, you probably do
not have the
luxury of paying points. Don't panic. You can
always try
to reduce your payments later in the life of
the loan if
rates get better or anything else
changes.
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| See Debbie on NECN |
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Debbie Siegel was interviewed by Peter
Howe of New England Cable News'
Business Day program on the day
the Bush Administration announced plans to
help bail out Fannie Mae and Freddie Mac
from foreclosure fallout. See what Debbie
had to say!
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| July's Home Value Improver |
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Make the great outdoors as
cushy as the
cozy indoors
We're in the heart of the New England
summer, and
you've probably been enjoying some quality
time on
your deck or patio. The good news is that
there is still
lots of outdoor time ahead of us. If you have
found
that your deck furniture or decor has not
been
lounge-worthy, now is a good time to make
a move
toward upscaling the outdoor portion of your
home.
Outdoor furniture and décor sales are in full
swing, so
if you take advantage of the timing, you can
create
yourself a whole new outdoor environment
for a
bargain.
If you haven't walked through the outdoor
furniture
section of your local home retailers in the
past few
years, you may not know that the days of
tossing
some old metal chairs in the back yard and
calling it
done are over. Today's deck furniture offers
comfort,
style, and convenience. And choices, oh the
choices!
Decorators advise people to think of their
decks as
living space, similar to the rooms in the
interior of the
house. Like any decorating, a methodical
step-by-step
approach is best.
- Assess the space.
Are
there any repairs
that need
to be done? Repair loose boards, peeling
paint,
dripping air conditioners, or other unsightly
or
hazardous issues.
- Think about how you use your
space.
Do
you use it
primarily for socializing, reading, lounging, or
other
activities? This will dictate what type of
décor you will
want.
- Plan what type of furniture would
work best.
Do you
prefer wrought iron or wicker? Is your space
covered,
and therefore thick, comfy cushions would
be easy?
Or, is your space totally exposed to the
elements?
Dragging cushions into the house every time
it rains
is a drag!
- Consider the position of the sun
and
shade during the time the deck is used the
most.
Also
consider where you put your grill. You don't
want your
guests to get a face full of smoke at your
next
barbecue.
Benches with plants are an inexpensive way
to jazz up
an outdoor space, as is some paint. Freshly
painted
deck balusters will make the space look
clean and
new. Hit the sales! Beyond furniture, you
can find
outdoor wall hangings, fancy lights,
benches, side
tables, and lots of other stuff that can make
your
outdoor space feel wonderful.
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I was pleased to appear with Peter Howe on
New England Cable News this month to talk
about the Fed's bailout of Fannie Mae and
Freddie Mac.
With all the issues these companies are
facing, it is more important than ever to
contact a mortgage professional with
questions regarding your mortgage or
program guidelines. It can be frightening as
a homeowner to read the paper and not
understand how your largest investment
may be affected.
As always, please feel free to call or
email anytime for
more information on any mortgage topic!
Best regards,
Debbie Siegel
President
Westchester Mortgage
P.S. You're receiving this E-Newsletter because you have a prior relationship with me or with Westchester Mortgage. If I've sent this to you in error, or if you want to remove yourself from the list at any time, just click the "SafeUnsubscribe" link at the bottom of this e-mail.
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Click here to read
my "Mortgage Minute" in
ForeclosuresMass.com's monthly
newsletter. This month's topic: "The Truth
About Mortgage Lending Websites."
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