40

Say I can lend money at a 10% rate. I lend you $10,000 and the note is for $11,000 due in one year. But, the next day, I can sell the note for $10,100, the buyer willing to get a return of 8.9%. ($11K/$10.1K). Why would I lend that $10K for a year, when I can turn over the loan and make 1% in a day? The mortgage is more complex, of course. But the concept ...


38

Each of the recent changes you listed has the following effect on your credit score: $4K on credit line: increases your debt utilization. The smaller the denominator (sum of all credit limits of CC's and lines of credit) the more this will lower your score. The good news is, within 30 days of paying that off your score will jump back up. Co-signing a $20K ...


32

To quote the poet Robinson... You better shop around. Talk to a few other banks and brokers, tell them what rate you want, and if they can't get it don't bother applying. However, online "rates" are generally lower than you actually get - they are enticements to get you to apply with them, and there's always some reason that you don't apply for the best ...


22

To avoid risk from rising interest rates, get a fixed rate mortgage. For the life of the mortgage your principal and interest payments will remain the same. Keep in mind that the taxes and insurance portion of your monthly payment may still go up. Because you own the property, the costs to maintain the property are your responsibility. If you rented this ...


20

I would ask her to be certain, but it should not hurt your loan officer. The loan officer gets rewarded for originating the loan. There is no penalty for them if a loan is prepaid that I have ever heard of. However, you need to look at what the closing costs are for the new loan to know if this is a good idea. Consider how much out-of-pocket you'll need ...


18

tl;dr: I think you can find a much better deal. Doing a strait refi will cost you some amount of money. However, a 2.5% fee ont top of closing costs seems really high. You can get a quote from Quicken loans pretty quick and compare their fee. Also I would check with a local bank, preferably one you already do business with. The 2.5% is probably their ...


17

Wow, you are in an excellent situation. If it was me here is what I would do: 0) I would only buy if I plan to stay in that location for about 5 years. If you are planning to move, then renting is not a waste of money. Also what are your future plans for your family? Are you planning on more children? Buy with that in mind. 1) At your salary, you ...


17

Can I pay $12,000 extra once a year or $1000 every month - which option is better? Depends when. If you mean 12K now vs 1K a month over the next 12 months, repeating this each year, now wins. If you mean saving 1K a month for 12 months then doing a lumpsum, the 1K a month wins. Basically, a sooner payment saves you more money than a later payment. The ...


15

Unfortunately, you've committed a bit of a home-buying blunder. Large new lines of credit close to home purchase are not advised. New lines of credit after an offer has been accepted have caused many purchases to fall through as buyers become unable to secure financing (until closing, financing is often not guaranteed). The good news here is that you did ...


11

The bank, upon request, should give you an amortization table. The remaining principal dropping a bit each month which means the next month, the payment will have a slightly lower amount going to interest. The table will show you each month's principal, and each month's interest. The addition payments you're trying to make will go 100% to principal. I ...


10

This contradicts the other answer so I think it's worth mentioning: I believe different companies have different pay structures and the only way you can know for sure is by asking your loan officer. A friend of mine purchased a house earlier this year and just last week he told me he wants to refi but is currently waiting because he too doesn't want to ...


9

I've never heard of a loan product like that. Yes, if they keep the funds in an account, it is no risk to the bank, but they would essentially need to go through the loan process twice for the same loan: when you pick a house, they need to reevaluate everything, along with appraising and approving the house. Even if you did find a bank that would do this ...


9

1973 was the first year of the oil crisis. Inflation increased radically, so inflation adjusted rates went negative. Mortgage rates adjusted once they realized that the new inflation wasn't a temporary change. The early 1980s were when the Federal Reserve increased interest rates to end the stagflation of the 1970s. The interest rate increase pushed ...


8

How can one offset exposure created by real-estate purchase? provides a similar discussion. Even if such a product were available in the precise increments you need, the pricing would make it a loser for you. "There's no free lunch" in this case, and the cost to insure against the downside would be disproportional to the true risk. Say you bought a $100K ...


8

If you have excellent credit, you will get the advertised rate. I don't know if a lender would go below the advertised rate. Lenders advertise the best rate they can offer.


8

A good faith estimate (GFE) is just that - an estimate. The Department of Urban Development made a GFE a requirement by law for loan applications to enable the buyer to compare among lenders. Furthermore, a GFE is a legally binding document with zero tolerance for some fees like origination charges and lender fees. This means that any change in these fees ...


8

I often use the cliche "don't let the tax tail wag the investing dog." In this case it's the house dog. If the tax consideration is enough to sway your decision either way, you need to sit down and re-evaluate the purchase. A bit more detail - Say your state tax is 4% (pls add a state to your question if I'm way off, or no state tax.). That's $8000 or so ...


8

As a legal contract, a mortgage is a form of secured debt. In the case of a mortgage, the debt is secured using the property asset as collateral. So "no", there is no such thing as a mortgage contract without a property to act as collateral. Is it a good idea? In the current low interest rate environment, people with good income and credit can obtain a ...


8

tl;dr: I agree with Pete B.'s assertion that you should continue shopping. That's not the whole story though; there are other factors that can raise your rate, and affect your closing costs. The published rate is typically the best rate you can get. Here are some other factors that can raise your rate: What is your credit score? (Obviously the higher the ...


8

It sounds strange, but is partially a matter of idiosyncratic terminology. There are three components to what you pay for a Danish morgage: Repayments of principal. "Interest", which is forwarded to the owners of the covered bonds that funded the mortgage. (This might be either a fixed rate or contractually specified to depend on interbank rates in a ...


7

There are multiple answers here which discuss credit scoring criteria. A good score doesn't require that you pay interest on a loan. I like that you're thinking about this so far in advance. A credit inquiry does impact your score for 2 years. I refinanced my mortgage in November 2011, and the result was nearly $5000 less interest per year. Along with that, ...


7

2.5%? Whoa, you are being robbed there. Straight-up, stripped-down, and bent-over-a-table robbed. Never agree to "fees". If they don't want to do the work to give you a loan, there are other lenders who do. Rarely agree to "points". If you know -- and I don't mean "think", I mean "know" -- if you know that you are going to hold that loan much longer ...


7

Will this come up during the underwriting? Yes. You will have to disclose all of your liabilities when you make the loan application. Is the score I got PQ for locked in? It depends on the lender. They might run another hard credit check, or they might not. If they do, you have to authorize it (but if you don't authorize it and they "require" one then ...


6

Note: I am making a USA-assumption here; keep in mind this answer doesn't necessarily apply to all countries (or even states in the USA). You asked two questions: I'm looking to buy a property. I do not want to take a risk on this property. Its sole purpose is to provide me with a place to live. How would I go about hedging against increasing ...


6

The answer depends on what else you'd do with that 2%. But first, let's look at some actual numbers. For simplicity's sake, let's say you have a £100k mortgage outstanding, your payment is £1000 per month, and you want to pay £1000 extra per month. 2% interest, compounded monthly for simplicity, so .02/12 = .00167% per month. (Your interest is probably ...


6

I see that you have considered the value of the tax deductions Presumably you are in a area with fairly low property taxes. Another thing to consider is that when you sell, as long as you use any capital gains to purchase another primary residence, those gains are not taxed. Based on your income, you can buy a lot more house than that, so your range seems ...


6

A single person making 6 figures is in the 24% tax bracket, a taxable income over $82,500. This means a 3.125% interest rate costs you a net 2.375%*. This is less than long term inflation. I understand being 'risk averse'. Only asking you to consider the long term. The difference between being invested in stocks vs cash (i.e. CDs or government treasury ...


5

Mortgage or other interest rates are determined by the banks on cost of funds, risk and operating cost. The Fed raises money from the markets by issuing Tresury Bonds at a specified rate. This rate at which it raises money varies depening on the economy. Thus there are 2 rates: the rate at which banks can borrow money from the Fed, which is higher than ...


5

The advertised rate is the best rate. That's how they get attention. If you have a lower than mid-700 score, your rate goes up from there. One thing that concerns me - are you looking to buy a home to live in or an investment (rental) property? I ask because you used the term "real estate." I don't mean to split hairs, but when people are looking to live ...


5

For the majority of banks (in the US), it will have no effect at all. (Banks that do manual underwriting may have their own custom rules.) The rate you receive for a mortgage is based only on your credit score, and your credit score is independent of your income. (If you have zero income and still manage to pay all of your bills on time while maintaining a ...


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