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2kids2cats
My babies
Member since 6/05 5229 total posts
Name:
f
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Interest Rates and First Time Buyer
Hello. Does 6.625 sound right for the lowest rate with no points at the moment? Also, I thought there was a benefit to being a first time home buyer. Our mortgage woman told us that it just allows you to put down as little as you want with the same rate. Is that true? I thought we could get a better rate for being first time home buyers.
Also, what does it mean to buy down your rate? How does one do that and is it beneficial? Thanks for your help!
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Posted 6/29/06 4:36 PM  |
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Prudential Douglas Elliman Real Estate
Long Island's Largest Bridal Resource | Long Island Weddings |
Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Interest Rates and First Time Buyer
that sound good to me- I forgot my DH told me the rates were this week
ask Meaghan- to explain the rest- I will butcher it
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| Posted 6/29/06 4:36 PM |
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CkGm
They get so big, so fast :(
Member since 5/05 13848 total posts
Name:
Christine
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Re: Interest Rates and First Time Buyer
That is actually a pretty good rate without any points. Buying down your rate, you pay points- one point equals 1% of the purchase price and is a good deal if you lowers your loan enough to justify the cost and you plan on staying in the home long enough.
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| Posted 6/29/06 4:41 PM |
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2kids2cats
My babies
Member since 6/05 5229 total posts
Name:
f
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Re: Interest Rates and First Time Buyer
Thanks so much. I'm so lost with all of this. It upsets me that a much lower price with a bigger downpayment than we were going to do in August is going to cost us the same mortgage due to the interest rates rising! I wonder if its worth it to buy down the rate.
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| Posted 6/29/06 4:41 PM |
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CkGm
They get so big, so fast :(
Member since 5/05 13848 total posts
Name:
Christine
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Re: Interest Rates and First Time Buyer
How much you pay to buy down the rate is negotiable and raries to how much you want to reduce your rate. We got our mortgage broker down to 1/5 point since he also did our BIL loan. It was only 3,000 on a 600,000 loan and DEFINATELY was worth it since he got it down to 6% from 6.5%. This was a month ago but I am sure you can get a better rate paying some points.
Let's say your loan is 200,000- for 1 point, it would cost you 2,000. If it brought your mortgage monthly payment down by say $100 a month it would take less than two years of living in that home to make it worth while to pay for the point. I hope that helps explain it. 
Message edited 6/29/2006 4:50:49 PM.
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| Posted 6/29/06 4:49 PM |
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MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
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Re: Interest Rates and First Time Buyer
That sounds good, especially for less than 20% down and zero points.
I would shop around a few more places if you want other quotes.
the above points explanation sounds correct to me!
Good luck
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| Posted 6/29/06 4:53 PM |
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2kids2cats
My babies
Member since 6/05 5229 total posts
Name:
f
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Re: Interest Rates and First Time Buyer
Posted by CkGm
How much you pay to buy down the rate is negotiable and raries to how much you want to reduce your rate. We got our mortgage broker down to 1/5 point since he also did our BIL loan. It was only 3,000 on a 600,000 loan and DEFINATELY was worth it since he got it down to 6% from 6.5%. This was a month ago but I am sure you can get a better rate paying some points.
Let's say your loan is 200,000- for 1 point, it would cost you 2,000. If it brought your mortgage monthly payment down by say $100 a month it would take less than two years of living in that home to make it worth while to pay for the point. I hope that helps explain it.
I sort of get it :). So how do you buy down a point, if there are not any points? And when you buy down your rate - does that 2,000 go into your mortgage payments? That would be worth it to me for our mortgage to be $100 less a month. So on a $340,000 loan you wanted to bring it down from say 6.625 to 6% it would cost around $3,500? Does every broker allow you do to this? Thanks again for your help!
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| Posted 6/29/06 4:56 PM |
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teacherwheart
LIF Infant
Member since 3/06 347 total posts
Name:
Tara
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Re: Interest Rates and First Time Buyer
I just called my credit union and they gave me the same rate as of today, however it does change daily.
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| Posted 6/29/06 6:07 PM |
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CkGm
They get so big, so fast :(
Member since 5/05 13848 total posts
Name:
Christine
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Re: Interest Rates and First Time Buyer
Posted by Kitkat
Posted by CkGm
How much you pay to buy down the rate is negotiable and raries to how much you want to reduce your rate. We got our mortgage broker down to 1/5 point since he also did our BIL loan. It was only 3,000 on a 600,000 loan and DEFINATELY was worth it since he got it down to 6% from 6.5%. This was a month ago but I am sure you can get a better rate paying some points.
Let's say your loan is 200,000- for 1 point, it would cost you 2,000. If it brought your mortgage monthly payment down by say $100 a month it would take less than two years of living in that home to make it worth while to pay for the point. I hope that helps explain it.
I sort of get it :). So how do you buy down a point, if there are not any points? And when you buy down your rate - does that 2,000 go into your mortgage payments? That would be worth it to me for our mortgage to be $100 less a month. So on a $340,000 loan you wanted to bring it down from say 6.625 to 6% it would cost around $3,500? Does every broker allow you do to this? Thanks again for your help!
Every loan has different terms, some will offer points and some will not and I just gave a for instance when I talked about the $100 a month. It may lower your payment by $25, $50, or even as it did in our case, $200 a month. It depends on how low a rate the points you purchase get you. So not every loan offers the points option- you would need to shop around to get the best deal. I used an upfront mortgage broker who shopped around for the best deal for us. He was the only one to find a 6% loan out of 3 brokers we talked to since the rates had climbed so high.
Oh, and you pay that fee up front at closing so you do need to have cash on hand. But that points "fee" is tax deductible.
Edited to say: You're Welcome! I am glad this extended education I received during escrow is being put to some use.
Message edited 6/29/2006 6:20:11 PM.
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| Posted 6/29/06 6:19 PM |
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maryg
LIF Infant
Member since 5/06 196 total posts
Name:
Mary
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Re: Interest Rates and First Time Buyer
interest rates are rising fast so i would say lock in now!!
i am already locked in about 2 weeks ago 6.58 first time home buyer's program and it is a discounted rate. the rate the day before we locked in was 6.65. the rate the morning we locked in was 6.5 and by the afternoon it was 6.58 so we locked it in right then. funny how a few hours makes a difference. and even that little bit of a point makes a big difference in the monthly payment.
your interest rate sounds right.
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| Posted 6/29/06 6:33 PM |
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MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
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Re: Interest Rates and First Time Buyer
for these first time buyer programs, what banks are you using?? Is there an income limit?
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| Posted 6/29/06 6:34 PM |
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maryg
LIF Infant
Member since 5/06 196 total posts
Name:
Mary
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Re: Interest Rates and First Time Buyer
Posted by Meaghan729
for these first time buyer programs, what banks are you using?? Is there an income limit?
i am not using a bank. i used a broker.
as far as that income thing, you need to make a minimum to qualify for the loan. not a maximum you can make.
am i making sense??
it's not one of those special loans for low income people. at least the one i am apply for isn't. but if you make near 50K combine there is a lot of loan programs for that range. anything higher, your in the "normal" ballpark apparently.
they always laugh when my dh and i ask if there is a special program for our income. it's really not that much either. those special programs really are for really low incomes.
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| Posted 6/29/06 6:42 PM |
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