Discount Points lowers mortgage payment
Discount Points lowers mortgage payment
Discount points are paid upfront to lower the mortgage. Borrowers often confuse between origination fee and discount points. Although the calculation of origination fee and discount points are the same, both are two different cost of borrowing. The origination fee is paid for the privilege of acquiring a mortgage. Ask your mortgage consultant if you need to pay origination fee too.
How to calculate discount points?
Discount points usually range from 1 to 3 points where each point equals one percent. For example, the borrower pays $1,500 upfront ((1% / 100) * $150,000) on a 1% discount points of $150,000 mortgage.
How much is the monthly mortgage payment with or without discount points?
On a $150,000 principal, 6.5% interest rate, 1 discount points, and 30 year mortgage, the monthly mortgage payment without discount points amounts to $948.10. Using 1 discount points, the borrower pays only $851.68 monthly mortgage payment which saves the borrower $96.42.
When you do get back the discount points?
Recoup time is how long to get all the money back with discount points upfront. The borrower gets $1,500 back in 16 months ($96.42 x 16). The borrower benefits from discount points if he does not leave and refinance before the recoup time on his home. Let s say the borrower locks the mortgage on a five year mortgage term. The borrower pays $851.68 for five years which put $5,785.20 ([$948.10 x 60 months] ” [$851.68 x 60 months]) back on his pocket.
General Rule
Discount Points are options. It is up to the borrower to decide whether to buy discount points. With planning and shopping, the borrower indeed can save money. Not to mention, the IRS allows the discount points as a tax deductible.
Dennis Estrada is a webmaster of <a href="http://mortgagecalculatorme.com">mortgage calculators</a> website that gives access to many resources, and calculators for mortgage.
Helpful Hints for Homeowners with ARM Pain
Is your mortgage about to inflict financial pain on your family? It might be, if you have an adjustable rate mortgage (ARM) that is scheduled to reset this year.
Depending on the type of ARM you have, you could see your house payment increase by 30, 50, even 100 percent in the next few months. This is because the Federal Reserve has raised interest rates seventeen times since 2004, and ARMs are tied to these rates. In addition, many home buyers entered the market with low introductory teaser rates that were scheduled to go up regardless of what interest rates did.
Most ARMs are known as hybrid ARMs because they combine features of fixed rate mortgages and adjustable rate mortgages. With hybrid ARMs, payments are fixed for a predetermined period of time “say two years. After this period, the interest rates reset, or adjust. If an ARM started out below market rates, as in the case of teaser loans, then it will reset upward at least to the market rate. If an ARM started out at market rate, it will reset to a higher rate if interest rates have risen since the loan originated.
This is exactly what is going to happen to more than three million adjustable rate mortgages that originated from 2004-2006 and are scheduled for their first reset in 2007 and 2008. According to Dr. Christopher Cagan of First American CoreLogic, the jump in house payments will force 1.1 million homeowners to default on their loans over the next six years.
You do not have to be one of them. If you have equity in your home “and more than 91 percent of homes with loans that originated before 2006 do “you probably can refinance to a fixed-rate loan. You may be contacted about refinancing by one of many mortgage brokers or loan officers who are tracking ARM reset dates through enhanced loan records known as ARM leads. Even if the fixed rate you are offered is higher than your reset rate, you should consider taking it. Most ARMs will continue to reset every six months until they reach the maximum allowable rate.
If you do not have sufficient equity to refinance, you might consider selling your home. This is what many people planned to do from the start: they financed their homes with ARMs with the idea that they would sell the home for a profit before the ARM reset. Unfortunately, rising interest rates and a glut of new homes have combined to create a slump in the housing market. Prices have fallen, so there is no profit to be made by flipping houses. Many sellers refuse to lower their prices, believing that prices will rebound. The trouble is that the rising ARM rates may wipe out any gains that might be achieved by waiting.
If you have already been hit with a large ARM reset and have been unable to make your payments, do not give up. The United States Department of Housing and Urban Development can refer you to free credit counseling. Depending on your situation, the counselor may suggest a number of options, such as renegotiating your monthly payments or obtaining a bridge loan that does not have to be paid back until you can refinance or sell your home. Some local governments are making money available to help distressed homeowners as well. Whatever your decision, do not delay. Waiting will only make your ARM pain worse.
The author of more than twenty books for children and young adults, <b>Bradley Steffens<b> is a freelance writer who contributes articles to a range of online and print publications. His latest book, <a herf="http://www.ibnalhaytham.net/"><i>Ibn al-Haytham: First Scientist</i></a>, is the first biography in English of the medieval Muslim scholar known in the West as Alhacen or Alhazen.
What You Don't Know About Property Tax Could Be Costing You Thousands of Dollars Each Year!
If you are over 55 and have owned your home for several years you may be eligible for property tax relief!
There are currently three propositions that affect eligibility for tax relief; Proposition 13, Proposition 60 and Proposition 90. You ll learn how each of these propositions are saving the over 55 home owners a significant amount of money.
Prop 13 ” The Golden Egg
Proposition 13 prohibits property tax increases until property ownership is changed. If you currently own your home you know how much money you are saving in light of the fact that housing values have sky rocketed over the last 5 years!
However, what happens when you sell your home? Will you have to give up the advantage of the lower cost property tax you currently enjoy? Not necessarily
Prop 60 ” Transferring Made Easy
Proposition 60 allows you to transfer your current property value to a new home within the same county you live in now. You must be replacing your primary residence and the cost of the new home must be equal or lesser value than your current home.
This allowance can be used once in your lifetime. For those of you who have a spouse that has taken advantage of this tax break previously, you will not be allowed as a couple to use this tax loophole again.
What happens if you move out of your current county?
Prop 90 ” Distance No Longer an Issue
Prop. 90 allows a county to choose to accept or deny Prop. 13 and accept a grandfathered property value assessment when buying a new home. As of June 1, 2005, seven California counties honor Proposition 13; Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara and Ventura.
Prop. 60 and 90 apply if you are trading down. (i.e. The value of your new home is less than the value of your old home.) However, the government being who they are, has stipulations.
o If you buy your new home first, then sell the old home, you must go down in price.
o If you sell the old home first, then buy the new home:
o In the first 365 days after the sale of your old home, you may go up 5% in the purchase price of your new home.
o If you buy your new home more than one year from the sale of your old home, but less than two years, you may go up 10%.
o You must file a claim with your county assessor s office within three years of the acquisition or completion of construction of the replacement property.
o Claim forms are available at the Assessor s public counter and in regional offices, or you may visit the State of California website, State Board of Equalization at: www.boe.ca.gov/proptaxes/assessors.htm.
Some buyers may choose to pay the commissions outside of escrow to keep the cost of the purchase price down. Your lender will prove invaluable in helping you maximize your costs/mortgage package to take full advantage of this incredible tax break.
Rosemarie Mandel has been providing outstanding lending service to her hundreds of clients for over 5 years. Her clients span the United States from coast to coast. Rosemarie may be reached by calling 818-444-4788, by visiting her website at www.innovativemortgagesolutions-sandiego.com, or by email at rosemarie@ims-sandiego.com. All Rights Reserved. This article may be reproduced in its entirely including contact information.
Mortgage Accelerators, Scams and Successes
Everybody who has a mortgage longs for the day when those monthly payments will end. Thousands of people are looking for ways to speed up that process, and many are finding the answer in what is called Mortgage Acceleration.
Mortgage accelerators come in differing shapes and sizes, and perform at different levels. The bottom line is this: If you want to pay off your mortgage, you simply must apply more money to the loan.
Some acceleration programs provide you with a plan to make small additional payments each month. This is effective in shortening your mortgage term, because additional payments (made to principle only) will lower the overall balance that you owe. That means less interest due. Interest is the enemy.
Paying an extra $100 per month can have the effect of shortening your loan term by as much as 4-5 years. The only way to go faster is to apply more money to your principle balance. But how? Most of us simply do not have much extra cash hanging around. If only there were a way to find extra money in our bank accounts, we could really accelerate our payoffs.
So, comes to market a whole new selection of options. It turns out that for over 15 years, folks in Australia, New Zealand, and parts of Europe have been using a system that squeezes more money out of their labors and applies it to their home loans. These people are paying an average of $150,000 less in interest for their homes than the average American. How do they do that?
What these Aussies, Kiwis and Euros are doing is combining their home loans, checking accounts, savings accounts, and lines of credit to create a new scenario in cash flow. The mathematics are sound and the results are undeniable. It works. The problems and risk come from the mixing of accounts and complicated management.
If you combine your primary checking account with a Home Equity Line of Credit, or HELOC, you can basically use your income to cancel interest in your heloc. This interest cancellation creates cash flow in a sense. This new cash flow creates opportunity for that extra money. You can actually use the bank s money interest free much like you would a credit card.
It is easy to see how, with a little bit of poor planning and bad math you could get your self in financial hot water here. You need help. So here is where you must be wary. Help means involving someone else. Uh Oh! Red Flag! Other people usually means high fees or possible scams. That is a matter of record, after all. And when it comes to your money .well, these other people had better be squeaky clean.
So, who can help, and who can you afford? Wealthy people have financial planners who they pay very well to watch their bottom line. Most of us cannot afford their hourly fees. So we just throw up our hands, go to work, and live paycheck to paycheck. But we still would like to be debt free and reach financial freedom. So let s explore the options again.
A Google search on mortgage accelerators will bring up some interesting things. You will find the Big Boys there Countrywide, Lending Tree, Quicken, Eloan, GMAC, DiTech, etc. These are the big mortgage companies who already have you in bondage, and now they want to ease your pain a bit with a bi-weekly pay plan or perhaps a nice re-finance package. Refinancing will only make your problems worse in the long run. The extra payment plan was already discussed. We want more.
Dig a little deeper and you will begin to see other companies there offering other options such as the Australian idea. Investigate these carefully. You want to find the option that is safest and offers the best results. And as for me, I don t have the time to learn advanced math and theoretical quantum financial physics. I need something that will make it easy. One company will float to the top United First Financial.
United First Financial has brought to market a new and revolutionary program that is beginning to catch on. They have spent years and millions of dollars creating software that combines the best of ideas from Australia and Europe and the American banking industry. Their product, called The Money Merge Account is a remarkable tool that provides a customized and flexible plan for each user. The user is guided by the software to pay off their 30 year mortgage and other debts in an average of 8-11 years! And this without changing your monthly payments or lifestyle.
Of course this sounds too good to be true at first. A second look and a review by a CPA reveals the solid principles involved. An investigation of U1st will uncover their beta test on 400 homes in Denver, with the highest possible success rate. The users there are actually moving about 20% faster on their payoffs than projected. This test period has proven the program works, and now the Money Merge Account, or MMA is available to anyone with a mortgage and decent credit.
The MMA does not touch your money and it does not pay your bills for you. The MMA provides a real time financial dashboard that shows you where you are headed and also the real cost of miscellaneous purchases and deposits. It is an amazing tool that can transform your understanding of your money.
Your MMA dashboard appears streamlined and is easy to navigate. Live, cheerful customer support is there for you for life. The MMA is transferable to your next property, and all updates are automatic and free of charge. United First guarantees you will meet the goals (if you follow the system) or your money back.
On the other side of the screen is unbearably complex programming that is constantly at work finding the best, fastest, most risk free way to pay off your debts and put you in charge of your financial future. A whole fleet of brilliant folks in the background have put all of that supercomputer power at your fingertips, and made it as simple as point and click.
I bought the MMA and am completely thrilled with it. It has changed the way I think about money, and it has changed the way that I see my future. My 26 remaining years of debt has been whittled down to 8.4 years. I see the light at the end of the tunnel. I hope you are getting a glimmer of hope now too.
It is very easy to find out what U1st Financial and the MMA can do for you. Simply contact a U1st agent and request a free mortgage analysis. It takes about 15 minutes, and the report will probably make your hair stand up. You can request an analysis by going to http://pro.debteraser2007.com or you can read more about it and take a video tour by going to www.debteraser2007.com .
Finally regular people can have access to a level of financial wisdom that was not available to them before. So, don t refinance or fall victim to scams that want to have access to your accounts. It s time to take control yourself. This thing is literally transforming families from a pattern of debt to a new paradigm of wealth building.
Just think about what you can do with your monthly payments when they no longer are required to pay debts. Even a conservative investment strategy will amass huge amounts of cash when supplied with a steady flow of capital, like the flow going out to pay the interest on your home loan this month, and the next, and the next, and the .Don t let the banks make all of the money. After all, you are the one who works for it.
Marc Rosenbaum
www.debteraser2007.com
Marc Rosenbaum lives in Colorado and works from home. He is a "recovering" builder of high end homes, now focusing on building wealth and wisdom in others.
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