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Coaches, What Do You Do About Refunds?
What does the coach do about refunds? There are three parts to this question: 1.When the client asks for a refund; 2.When the client just doesn’t show up for the appointments, and; 3.When you need to fire the client As coaches we want to do good...
Managers Who Leave PR to Others
You’re a business, non-profit or association manager who needs to achieve your organizational objectives on schedule. Since public relations should be helping you do just that, why leave it wholly in the hands of others?
In your own best...
The Top Five Reasons For Posting In Online Guestbooks
An online guest book is a log for people to sign and sometimes leave brief messages when they visit someone’s website.
Possibly you’ve posted to, or “signed” one of these guest books at one time when you’ve visited someone’s website.
...
Thought Fixed rate will give you a respite from the perils of variable rates! Think again
Slight increases in the interest rates raise your hackles. Tension grips your mind as to how you are going to make the extra payment. Preparations begin right then to provide for the repayment, though it requires a huge cut in the monthly expenses. ...
What Is Your Legacy of Success?
Success! Easy to talk about, but difficult to achieve. Or is it? Success is defined differently by virtually anyone you ask because success is a very personal experience. Is your definition of success based on the values, dreams and beliefs of...
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Should I Pay Points?
To pay points or not to pay points, that is the question. Before answering the question it is first important to understand what exactly points are. A point represents 1% of a home loan. For example, a $100,000 home loan would equate to each point being $1,000. A home loan of $150,000 would equate to each point being $1,500. This is important to understand.
Generally speaking you will be faced with the prospect of paying points at two critical junctures in the home buying process. The first time you may be faced with this decision is when you need to decide if you want to pay point(s) to lock-in your interest rate. You may pay a fraction of a point, one point or perhaps more than one point. When you are approved for a home loan you will be told an interest rate that you qualify for. That interest rate and your qualification will be for a specific period of time. It may be 30 days, 45 days, or 60 days, or any number of days in between.
Your loan officer may then tell you that you can lock-in your rate for a specified period of time. A failure to lock-in the interest rate may result in a higher interest rate when you close the loan if the closing date is after the specified duration of your mortgage commitment. Your loan officer can offer to extend that interest rate based on your paying point(s). It is important to have a general sense of what is happening with interest rates in order to make the right decision. For example, if interest rates have been raising slowly over a period of time you may decide that it is worth paying the point(s) in order to lock-in your interest rate.
Your loan officer should be able to give you their best guess as to what interest rates and what your rate may be if you do not pay to lock-in your rate. You can then calculate the amount of money
this will cost you over a year or more period of time. A simple mathematic analysis will determine if you are saving more money by paying the point(s) or not. Clearly you may not decide to lock-in if you believe the amount of money you will save is negligible compared to the cost of the lock-in.
The second time you will be faced with this decision is when you are given your overall loan package details. Generally speaking you will likely be presented with the option of paying point(s) to reduce your interest rate. So, for example, you may be told that your interest rate will be 6% with no points, however, it can be reduced to 5.75% if you pay one point or 5.5% if you pay two points. Again, mathematics will help solve this dilemma.
You need to have a general understanding of how long you anticipate living in the home, or how long you will live in the home before refinancing. That is what you can refer to as the life expectancy of this particular mortgage package. Simply calculate the amount of your mortgage payments over that period of time at both interest rates. The difference saved is the important factor. If the amount saved is greater than the points you would pay to reduce the interest rate than you may consider paying the points to lower the rate. If the amount saved is smaller than the amount you pay in points than you may consider declining the offer.
The key to the decision is having a clear sense of what your plans in the home are, plans for possible refinancing, etc. Once you have this information in mind you will find that the decision as to whether or not to pay points will be clear.
Ethan Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.homeloanave.com
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