|
| Author | Thread |
|
|
03/17/2006 07:41:57 PM · #1 |
What is the difference between a down payment and using points to buy a house? I looked around on the net, but couldn't find much. Thanks!
|
|
|
|
03/17/2006 07:46:40 PM · #2 |
| Points just reduces the percentage of your interest. You ar epaying interest up front to maybe save you a couple of bucks in the long term. Has nothing to do with your initial downpayment as far as principal is concerned. I perosnally stay far away from paying points. |
|
|
|
03/17/2006 07:48:38 PM · #3 |
| paying points is much better if you plan on staying in the house you purchase for a long time. The shorter your time frame, the smaller the benefit. |
|
|
|
03/17/2006 07:49:50 PM · #4 |
| Thanks, that makes a little more sense now. I appreciate it! |
|
|
|
03/17/2006 08:03:59 PM · #5 |
Motley Fool has great financial advice...some of it for free. Honestly, if you should sign up, like this site, it is money well spent.
By the way, I am supposed to close on my first home this upcoming Wednesday...it's been an interesting experience.
|
|
|
|
03/17/2006 08:30:11 PM · #6 |
A true conventional loan is 20% down, so an a 150,000 house that would be $30,000.
Unless there is some special program, it you put down less you will have to buy/pay for PMI (a type of mortgage insurance) The banks all figure if you have too little of your money in teh house you mihgt walk away and then they hacve to reposees it and sell it - and that costs them money, so the insurance will pay them if you walk away/default.
YOu pay interest on th emoney you borrow. 6% lets say. You can 'buy that down' by paying points, 1 point being 1% of the loan. So if yo upay 3 points the interest rate then might be 5.25%. This is very good if you plan on astaying there 10+ years. If you plan on moving (new job, bigger hoouse, better schools, etc) in less than 10 years, skip the points.
If you itemize your deductions on your taxes, you can deduct your interest and property taxes every year. You can also deduct the points you paid over X numebr of years (ask your tax man - 3 or 5 i think). Some other closing costs are deductibale too.
Closing costs: property survey, title insurance, application fee, credit check fee, flood insurance, PMI prepayement, points, homeowners insurance - and since property/school taxes are paid a year in advance, the seller has paid them for all of 2006. You will be living in the house for the rest of the year, so you owe the seller the taxes for the balance of the year (since you'll be livining in the house).
I was a real estate agent, but i never played one on TV.
|
|
|
|
03/17/2006 08:31:04 PM · #7 |
Originally posted by w24x192:
Motley Fool has great financial advice...some of it for free. Honestly, if you should sign up, like this site, it is money well spent.
By the way, I am supposed to close on my first home this upcoming Wednesday...it's been an interesting experience. |
Stressful. They say home buying and getting married are the two most stressful experiences in a person's lifetime.
|
|
|
|
03/17/2006 09:02:30 PM · #8 |
If you can't pay 20% and need to pay PMI, you can see if it's possible to avoid that by taking a second mortgage with a slightly higher interest rate to make up the difference. That way, the extra you're paying is to pay off your mortgage and not the lender's mortgage insurance. (This was what were able to do here in Florida.)
Message edited by author 2006-03-17 21:03:50.
|
|
|
|
03/17/2006 09:22:00 PM · #9 |
Originally posted by Prof_Fate:
Originally posted by w24x192:
Motley Fool has great financial advice...some of it for free. Honestly, if you should sign up, like this site, it is money well spent.
By the way, I am supposed to close on my first home this upcoming Wednesday...it's been an interesting experience. |
Stressful. They say home buying and getting married are the two most stressful experiences in a person's lifetime. |
Stress? Nooooooooo....wait, yes.
Not only is this my first house, but it is my first house that is a foreclosed as-is property with a bad roof that needs to be fixed before closing.
For those of you that don't know, 'as-is' means I buy any defects in the house, unlike a more typical home purchase where you can negotiate the price or have the seller fix things prior to buying. Since the roof on my as-is house-to-be is so bad, no lender will give me money to buy it unless it is fixed, but the seller won't fix it because it is being sold as-is. In addition to that, it is a breach of contract for me to do anything to the house prior to closing. It's the proverbial chicken and the egg: can't buy the house until the roof is fixed, can't fix the roof until I buy the house.
Fortunately, the lender, my realtor, and the seller worked together, got the price of the roof work rolled back into the loan (which in itself was a major production), the seller paid to have the roof fixed, which he will be reimbursed for upon closing, and all is said and done.
So, my advice? Get a good, experienced, connected realtor and be nothing short of unnervingly proactive. Ask all the questions you can, get your information together ASAP and make sure that your lender has it early. Take lots of photos, keep all your receipts, and don't be too hasty.
|
|
|
|
Current Server Time: 04/25/2024 01:37:48 PM  |
Home -
Challenges -
Community -
League -
Photos -
Cameras -
Lenses -
Learn -
Prints! -
Help -
Terms of Use -
Privacy -
Top ^
DPChallenge, and website content and design, Copyright © 2001-2024 Challenging Technologies, LLC.
All digital photo copyrights belong to the photographers and may not be used without permission.
Current Server Time: 04/25/2024 01:37:48 PM EDT.
|
