Pat Starnes' Snippets

Choose A Reputable Lender When Financing Your Dream Home

Keys with HouseMy seller client and I have a closing scheduled for tomorrow, so we reviewed the settlement statement today. 

I have reviewed settlement statements on behalf of my clients for years. It's best to review them in advance so any corrections can be made before we arrive at the closing table.

I'll verify that the seller's portion of the closing costs is properly stated, the taxes and HOA fees are pro-rated between buyer and seller, loan payoff is accurate, the real estate commission correct, etc.

On this particular transaction, the seller's summary was simple. Everything was in perfect order and reflected as per the terms of the sales contract.

 

Then my eyes glanced over to the buyer's column.

 

BAM!

 

I couldn't believe my eyes!

The outrageous fees charged by this out-of-state lender

made me do a double-take.

 

The buyer is being charged SEVERAL THOUSAND DOLLARS in POINTS (around 3%), in addition to a hefty origination fee to obtain a loan that, when all the adjustments are made, is still comparable to "the going rate" with local lenders.

Considering our current record low interest rates, it doesn't make sense to spend thousands of dollars paying "points" to buy down the interest rate even further.

For those who don't know what "points" are, here is a brief description:

 

Let's say your loan amount is $250,000 and the prevailing interest rate is 4.25%. The lender can lower your interest rate if you pay a "point", which is 1% of the loan amount. In this case, you could pay an additional $2,500 to lower the interest rate by .25%. 

 

Is it beneficial to pay "points" to buy down a mortgage? For some people, perhaps. You can calculate whether paying points to lower the already historically low interest rate is right for you, by dividing the cost of the buydown ($2500) by the monthly savings. If you stay in the home longer than six years, you could realize a savings. If you sell before the break even point, it's money you won't get back.

 

Understand, I am not the buyer's representative in this transaction. Another agent brought the buyer to the table. I do not know the relationship between this Realtor and the buyer; nor do I know if the LENDER supplied the Realtor this lead through a business referral.

Cartoon of People Talking

 

If I were representing this couple, we would have had a long discussion regarding "points" and whether or not it was a worthy expense.

 

Better yet, I would have referred them to one of my LOCAL, trusted loan originators who would have discussed their financial needs and future plans and together THEY could formulate the best course of action.

 

 

When considering a home purchase,

choose a reputable lender to finance your dream home. 

 

Image #1 courtesy of phanlop88 at FreeDigitalPhotos.net

Image #2 courtesy of mapichai at FreeDigitalPhotos.net

 

Written and Published by Pat Starnes REALTOR

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Pat specializes in Residential and New Home Sales 

Primary Service Area:

Brandon, Pearl, Ridgeland, Flowood and the Ross Barnett Reservoir area

 Pat Starnes, Broker Associate

Front Gate Real Estate, 6700 Old Canton Rd., Suite C

Ridgeland, MS 39157

601-278-4513 - Cell

 

Recent Blog Posts by Pat Starnes:

 

Rankin County Requires Utility Permit and Inspection When House Sells

What Does The ABR Designation Stand For?

We Want More, We Want More, Right?

Hot Temperatures and Hot Home Prices in Brandon MS 39047

Should You Consult a Realtor When Buying New Construction?

Homes for Sale in Scottish Hills ~ Brandon MS 39047

Homes for Sale in Hidden Hills Subdivision, Brandon, MS 39047

Homes for Sale in Castlewoods Subdivision, Brandon, MS 39047

Gardens of Manship Neighborhood Information - Brandon, MS 39047

 

Are you looking to buy or sell a home in the Brandon MS market? Call me!

Comment balloon 30 commentsPat Starnes, Brandon, MS • October 28 2015 01:36PM
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