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Mortgage Points Explained

by Rose Price

If you are a Central Illinois homebuyer who is requesting quotes from a lender for a home loan, you have most likely found that the quotes frequently include both loan rates and points. If you are like most people, you may be confused by what exactly a point is.

Mortgage points describe certain charges to be paid in order to obtain a mortgage on a home. Each mortgage point is a fee based on one percent of the total amount of the loan

A point is a fee equal to 1 percent of the loan amount. For example, A 30-year, $200,000 mortgage might have a rate of 6 percent, but come with a charge of 1 point, or $2,000. A lender can charge 1, 2 or more points. There are two kinds of points: discount points and origination points.

 •Discount points: These types of points are really prepaid interest on the mortgage loan Because, the more points you pay, the lower the interest rate on the loan and vice versa. Borrowers typically can pay anywhere from zero to 3 or 4 points, depending on how much they want to lower their rates. The advantage to this type of point is that it is tax-deductible.
 

Origination fee: This is a fee that is charged by the lender to cover the costs of making the loan. The origination fee is only tax deductible if it was used to obtain the mortgage and not to pay other closing costs. The IRS specifically states that if the fee is for items that would normally be itemized on a settlement statement, such as notary fees, preparation costs, and home inspection fees are not deductible.

The longer you keep the home financed under the loan that has the purchased points, the more money spent on the points will pay off.  And if the homebuyer has the intention to buy and sell the property or refinance in a big hurry, the buying points will actually end up costing more than just paying the loan at the higher interest rate.

Whether or not you pay points, or how many points can be effected by a variety of factors.  The amount of money that you can put down at closing and also how long you plan on staying in your home can be a factor. If you are planning to stay in your home for a long time, you may find it worth it pay points so that it reduces your interest rate.

The process can be confusing so make sure to have your mortgage lender explain these fees with you at length!

 

 

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America Recycles Day 2011

by Rose Price

Tuesday, November 15, marks the 13th annual America Recycles Day and local company Green Purpose, LLC, will hold a special event to help educate the consumer on how recycling works in benefiting our environment. The Green Purpose Team’s goal is to reach Zero Waste Status in Champaign County! Now, that’s a goal that deserves great praise. Their approach to recycling is very innovative. They do everything they can to recycle the items they collect, but sometimes some items are non-recyclable. That does not stop them! Green Purpose, LLC, turns those non-recyclables into neat and usable creations. They call it reusanomics. They also prevent usable items from reaching a landfill by doing a Materials Exchange where members can get perfectly usable items free of charge.

Don’t forget to stop by Green Purpose, LLC  in Champaign to not only learn more about recycling, but also to get inspired into creating  your very own works of art from non-recyclables.

For more information about the Green Purpose event, contact Steve Rosenberg by clicking here.

Location: Green Purpose, LLC, 807 Pioneer St., Champaign, IL 61820 Date: Nov. 15, 2011
Time: 9 a.m. - 6 p.m.

 

 

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A recent survey on behalf of Whirlpool Corporation (NYSE: WHR) and Habitat for Humanity International conducted by the NAHB Research Center found that individuals who are renting perceive homeownership as a preference. In fact, 68 percent of individuals currently paying rent for their residences said they would prefer to own their own houses. Although previous releases issued about this study have discussed the feeling among consumers about the cost of owning a home, this information demonstrates that regardless of concerns, the general perception among those surveyed is that they prefer to own a home. The complete study reported opinions from consumers and builders on various topics related to home building.

There are many noteworthy challenges that come with renting and this was shown in the survey by Whirlpool and Habitat as well. The majority of renters also displayed a perception of being concerned with their costs—60 percent said they were concerned about the cost to rent, while 52 percent said they were concerned about the cost of electric and gas bills.

"We're encouraged that this study demonstrates the desire of consumers to become home owners," says Tom Halford, general manager, contract sales and marketing, Whirlpool Corporation. "Whirlpool Corporation is proud to work with Habitat for Humanity International to help build homes that can have a positive impact on families and communities."

According to the survey, another factor when it comes to home ownership is the perceived safety. Of all renter respondents, 44 percent said they had not taken any action to increase the safety of their households in the past 6-12 months. Other respondents said they undertook minor safety precaution projects such as installing a lock on a door (32%) and putting in a smoke alarm (31%).

Besides owning their own houses, other desired changes that renters indicated they would like included having a backyard (39%), the ability to decorate (38%), upgrading appliances (36%) and increasing home eco-efficiency (31%).

For more information, visit www.whirlpoolcorp.com/habitat or www.Habitat.org.

Want to know more? Contact your real estate agent for any questions regarding homeownership in your local area.

 

 

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Celebrating 100 Years of History

by Rose Price

This year, 2011, marks the 100th year of an educational and community triumph. The Spurlock Museum located on the campus of the University of Illinois is celebrating its centennial anniversary. This full year celebration will give us more than just a glimpse into this Urbana, Illinois museum. Besides showing its vast collection of more than 40,000 objects, Spurlock Museum has also paid homage to those who have contributed to, worked at, volunteered at, and visited the museum.

This sense of community involvement is given more meaning by having actual photographs and videos displayed of the individuals who have given a piece of their time into making this museum the gem it is today. Several artifacts that have not been displayed have also made their debut. This is a special treat given that the museum only shows around 3 percent of their objects during any exhibit in order to keep them well preserved.

The history of the museum has evolved since its inauguration in 1911 by expanding its focus from western cultures into a more global approach. The Spurlock Museum now displays objects of six continents which encompass over a million years in history!

I encourage you to visit this Central Illinois museum’s exceptional exhibit and become a part of this collecting and connecting experience.

 

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Home Buyers Looking For Latest Trends

by Rose Price

In today's tough competitive real estate market, potential Champaign, Illinois homebuyers have increasingly made it clear that their‘must have’ list of amenities now includes efficient, sustainable materials and features that focus on making their home an affordable sanctuary to live and work. Gone are the extravagant, over the top, “McMansion” types of home and now the trend is for thoughtfully planned living areas that combine both indoor and outdoor lifestyles and make room for a home office. Below are some of the top trends that homebuyers are looking for:

  1. Green building and sustainability – from recycled materials to water wells and water collection systems, today’s home buyer is concerned with organic, sustainable features. While green building can sometimes be expensive up front, even the cost conscious know that the results may save money in the long run.
  2. Energy efficiency – those who go green are also concerned with sustainable, efficient resources. Buyers want energy efficient appliances and the latest in insulation techniques using spray foam and gels. Not only do they reduce current energy costs, but energy efficient homes help with resale.
  3. Outdoor living areas – more people are staying home these days, and one of the hottest trends is outdoor living areas that create a seamless indoor to outdoor space and include living room style features. From comfortable sofas to televisions and sound systems and creative outdoor cooking areas, the right outdoor space becomes a natural extension of the interior.
  4. Main floor master suites with luxurious baths – now more than ever, home is an oasis for hardworking homeowners, and large masters on the main floor (away from kids rooms or play areas) are key to a homeowner’s satisfaction. Along with the master, buyers are interested in soaker tubs, walk-in showers with seating and dual showerheads.
  5. Home offices – more and more people find themselves telecommuting or working from home in the evenings, and space for a home office has taken priority over traditional home features like formal dining and living and even media rooms. Home buyers seek that unique space that separates work from family living areas.

Home buyers priorities have shifted to reflect changing economic times. The top trends reflect a new desire for comfort and flexible lifestyles, along with an ever growing concern for sustainability and efficiency.

Reach out to a well-informed realtor who can give you the latest industry trends!

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Should I Buy a Home Now?

by Rose Price

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

Displaying blog entries 371-376 of 376

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