Home Run Real Estate Team

Home Run Real Estate Team is your local real estate connection to get a positive, helpful partner when buying or selling a home in the Clarksville, TN area.


Leave a comment

Higher Down Payment vs. Paying for Discount Points to Reduce Monthly Mortage Payments

 realtor

Last week we explored the basics of home mortgages through key terms. This week, we’d like to dig a little deeper into reducing your monthly mortgage payment in two ways. This article from Realtor.com really aids in breaking down the difference between down payments and discount points considering that they both will essentially lower your monthly mortgage payment but in two very different ways. But which will give you more bang for your buck?

As we discussed last week, the monthly mortgage payment is calculated using the loan amount, interest rate, and the term or duration of the loan.

mort  Down Payments
The down payment is the initial lump sump of money presented at closing and is directly applied to the balance of your mortgage. You are essentially paying a chuck of your principal mortgage amount up front reducing the amount of your loan. The more money you put down, the less you owe on your home which reduces your monthly payment.

Paying Discount Points

1 pt = 1% of your loan amount. Purchasing points allows you to pay an upfront fee to lower your interest rate. Also this can also be considered a nice tax deduction.

To determine whether this decision will be profitable to you as a consumer, there are a few basic calculations in order.

  • Decide how many points you would like to pay. mon
  • Calculate the new monthly loan payment amount using the reduced interest rate
  • Subtract that monthly amount by the original monthly loan amount to get the monthly savings
  • Divide the cost of purchasing point(s) by your monthly savings to see how long it would take to break even on your purchase

Basically, the longer you stay in your house, the more profitable it becomes to purchase points. If you are purchasing your dream “forever” home, this may be the path for you. However, when you invest in a larger down payment, it lowers your  monthly payment without being affected by the length of time you intend to keep your home. So for individuals or families looking for a starter home purchasing points may not be a smart financial decision.

In all, it is important to stay informed, do a little research and calculations before making any major decision regarding your home mortgage but we hope that we were able to make those decisions a little easier today! To view the article in its entirety from Realtor.com click here.

Thanks for checking out our blog! Enjoy this article? Subscribe to our blog for daily updates featuring home and property listings in Clarksville, TN, recipe of the week, home and yard maintenance tips, up to date financing information, and more events going on around Clarksville. You can also find us on Facebook here and follow us on Pinterest here.

Home Run Logo

Chris Sutton
Reliant Realty
Home Run Real Estate Team
931.444.7203
www.homerunrealestateteam.com
homerunrealestateteam@gmail.com


Leave a comment

Basics of Home Mortgages Courtesy of Wells Fargo

wells
When starting the home buying process, you hear all sorts of words like APR, discount points, and origination fees. without a basic knowledge of what those words mean to you and your monthly house payment, they can taint the entire home buying process with a feeling of intimidation and apprehension. So today, we thought we would share with you an article from Wells Fargo Home Mortgage which helps to explain and simplify these terms to enable you to feel more empowered and comfortable when purchasing a new home.

mort  Key terms:

Interest Rate – a percentage of the loan which is paid to the bank as a service fee for allowing you to borrow money from them. The amount is based on the current market conditions, you and/or your spouse’s credit score, the down payment amount, and type of mortgage.
Discount Points – 1pt = 1% of the mortgage amount. You may be eligible to pay 1 or more pts to lower your interest rate which would lower the monthly payment. Usually these are tax deductible.
Origination Charge – this is a service fee paid to everyone involved in producing your loan. It includes fees, document preparations, underwriting fees, fees for service, and any other expenses incurred by the loan officers.
Loan Term –  the amount of time the homeowner has to pay back the amount of the loan. In general, shorter terms = higher monthly payments but they have lower interest rates which will cost you less for your mortgage in  the long run.

These four terms make up the APR or annual percentage rate. The beauty of the APR is that you can use it to compare mortgages of the same amount from different companies by considering their total annual cost allowing the consumer to choose the best and most affordable loan for themselves.

What makes up your monthly payment?

Principal – the amount that you borrowed from the bank. Paying on the principal reducesmoney the outstanding mortgage balance.

Interest – the fee for borrowing money from the bank. Paying this does not reduce the amount of your outstanding mortgage balance

Taxes – local property taxes which are lumped in with your monthly loan payment and collected in an escrow account to be taken out when taxes are due.

Insurance – homeowners and hazard insurance which are also collected on a monthly basis and collected in an escrow account to be paid when premiums are due.

Hopefully this article has helped you to understand the mortgage process a little better and reduced the amount of anxiety associated with the home buying process. It may  be easier than you think to own your own home! To view the full article from Wells Fargo Home Mortgage click here.

Thanks for checking out our blog! Enjoy this article? Subscribe to our blog for daily updates featuring home and property listings in Clarksville, TN, recipe of the week, home and yard maintenance tips, up to date financing information, and more events going on around Clarksville. You can also find us on Facebook here and follow us on Pinterest here.

Home Run Logo

Chris Sutton
Reliant Realty
Home Run Real Estate Team
931.444.7203
www.homerunrealestateteam.com
homerunrealestateteam@gmail.com

 


Leave a comment

Home Buying Process Have You Stumped?

houseLet’s face it, the home buying process can be pretty daunting whether you are purchasing your first home or your fifth if you don’t have a grasp on the basics. Our friends over at Mortgage Investors Group always have some great tips and tricks to help demystify the process.

We came across this article on their website and thought it would be useful to share! To view the whole article visit their site here.

MIG

Four Keys to Being Prepared for Your First Offer

1. Know exactly how much house you can afford. By pre-qualifying for a loan, you will have a great price parameter  to stay within when searching for a home. This will also tell you not only the total amount you can afford, but also how much cash will need to be on the table to cover things like down payments, closing costs, purchasing interest points etc.

2. Know where you want to be. Finding the perfect house in the wrong neighborhood is not going to benefit you and your family in the long run. Some things to consider first: length of commute, quality of the school system, crime stats of the neighborhood, how far will you be from amenities, etc. Find an area in town that meets your criteria and start your search there. Then when you find a contender, its a good idea to take a walk around the neighborhood, talk to residents near your house, drive by at night to see if you can hear highway noise, loud neighbors, or constant dog barking.

3. Choose your Property type. Will you need an ample amount of space for a large family and pets? You will probably need a single family home. Single or Just the two of you? A condo, townhouse, or apartment might fit your needs perfectly. Some things to consider are HOAs, management fees, and whether or not you will have to carry homeowners insurance. All of these factors come into play when considering your bottom line monthly cost.

4. Obtain a valid pre-qualification letter beforehand. Proper documentation can save you a lot of wasted time and heartache. This  should include document verification, credit check, and automated or actual underwriting.

The folks over at MIG can really make a difference in the ease of home buying. Contact one of our preferred loan officers, Matt Poag, today to find out how he can assist you in this process.

Matt Poag

615.777.4663

matt.poag@migonline.com

We hope this article helps! Enjoy this article? Subscribe to our blog for daily updates featuring home and property listings in Clarksville, TN, recipe of the week, home and yard maintenance tips, up to date financing information, and more events going on around Clarksville. You can also find us on Facebook here and follow us on Pinterest here.

Home Run Logo

Chris Sutton
Reliant Realty
Home Run Real Estate Team
931.444.7203
www.homerunrealestateteam.com
homerunrealestateteam@gmail.com