Home homebuyer aug99

homebuyer aug99

August, 1999 Newsletter

The Home Buyer’s Information Center Newsletter
<https://www.ourfamilyplace-staging.wmnnzja3-liquidwebsites.com/homebuyer>
+++++++++++ August 16, 1999 +++++++++++++++++++

CONTENTS:
Introduction
Mortgage Rate Update
New on the Site: Real Estate and Mortgage Glossaries
Home Buyer’s Questions
This Month’s Tip: 15 Year Mortgages

Introduction
Due to some degree to the increases in mortgage rates (see the next story), Real Estate markets in many areas of North America have cooled just a bit in the last month. For buyers, this can be a mixed blessing. Higher rates may mean higher payments, but a less active market often means both more availability of properties and a better bargaining position.

Mortgage Rate Update

As of early August, in the U.S., mortgage rates showed a definate increase from the previous 2 weeks, averaging in the 7.8% range for a 30 year mortgage with 1 point. In Canada, 3 year closed term rates were also in the 7.8% range.

What is fueling the rate increases? Largely it has to do with inflation fears. Mortgage rates are closely aligned with inflationary indexes and the latest news has not been exceptionally good.

Additional mortgage information can be found at:
<https://www.ourfamilyplace-staging.wmnnzja3-liquidwebsites.com/homebuyer/mortgage.html>

New on the Site: Real Estate & Mortgage Glossaries

If you are buying a house for the first (or maybe the second or third!) time, you will quickly be aware that there are a lot of terms and “lingo” common in the Real Estate and Mortgage industries that you may not be familiar with. We’ve added several new pages with the most common terms and their definitions.
Real Estate:
<https://www.ourfamilyplace-staging.wmnnzja3-liquidwebsites.com/homebuyer/terms.html>
Mortgage:
<https://www.ourfamilyplace-staging.wmnnzja3-liquidwebsites.com/homebuyer/glossary.html>

Home Buyer’s Questions
We have always had an area where we answered some of the most common questions posed by home buyers. We have added the capability within the last week for you to ask a specific question and we will either answer it for you or attempt to direct you to more information. You can find the Questions page at
<https://www.ourfamilyplace-staging.wmnnzja3-liquidwebsites.com/homebuyer/questions.html>

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This Month’s Tip: 15 Year Mortgages

Regular visitors to the Home Buyer’s Information Center know about our advice to always consider a 15 year term when applying for a mortgage. Many buyers reject a 15 year mortgage without full investigation because they believe that their payment will be double that of a 30 year. The difference in monthly payment (which, depending on the rate, is often less than a 30% increase over a 30 year payment) pays huge rewards in the amount of interest saved. Using an example of $125,000 mortgage at 8%, the Principal and Interest payment on a 30 year term is $917.20 with a total of payments (if the loan goes to term) of $330,192. Without even factoring in the potential lower rate of a 15 year term, the monthly Principal and Interest payment of $1194.56 converts to a total of $215,021 and a savings of $115,021! The savings benefits are obvious, but another big benefit of a shorter term mortgage is the fact that your equity will grow at a much faster rate. More equity equals more options: You have more flexibility (and more available for a down payment) should you decide to move. You have more savings built into your home should you want or need to “tap” some of the savings through a home equity loan. If the market for homes softens a bit, the more equity that you have available the safer your position will be.

Of course, not everyone can qualify for the larger payment that comes with a 15 year mortgage. Sometimes, due to a borrower’s debt to income situation, the maximum mortgage amount will only convert to a 30 year mortgage. Perhaps you simply do not feel comfortable committing to the higher monthly payment. Are you stuck paying the larger interest amount? In most cases, no. Generally, there will be a provision to pre-pay principal throughout the term of the loan. At closing time, have your lender draw up a 15 year amortization (schedule of payments) table so that you know exactly what amount of payment will be needed to pay off the loan in 15 years. If at all possible, make your payments at the 15 year rate as often as you can (if you do it every month, you will, of course, pay off the loan in 15 years). Even though it takes some discipline, the advantage of this program is that IF you do not have the extra payment available on a given month, you are not locked into the higher payment–your obligation is only to the 30 year payment amount.

Another option is, if possible, to consider a little less house (and price). For some home buyers, the added security of the 15 year loan will offset some of the amenities that it would take a 30 year loan to achieve. This of course is a decision that will be influenced not only by personal preference but also by the realities of the current housing market in your area (it may not be possible to spend less money and still get the house you need).

As always, if you have suggestions for improving the site, or topics you would like to see addressed in this newsletter (or, if you have used the Home Buyer’s Information Center to successfully purchase a home), drop us a quick line

Thanks and have a great month!

The Team at the Home Buyer’s Information Center

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