Gene Mundt - Let's Talk Mortgages & Real Estate! : Illinois: Bolingbrook

•      Have the required minimum Credit Score, but have outstanding, past due collection accounts.   
  
•       Do NOT have the funds needed to pay-off debts/collections in their entirety ... but still have the necessary savings for Down Payment and Closing Costs.

 

 

What's Your Point??

 Nawwwww ... Not THAT Point!

 

 

 

 

     A great scene, isn't it?  But it's not those "points" I'm going to talk about in this blog.  No, I'm talking the "points" referred to when discussing mortgage costs and options. 

 

     I've had several discussions as of late, with some pretty confused borrowers regarding these "points".  They've had no real grasp of exactly what a "point" is prior to our discussion.  What it can equate to in cost to them.  How the cost of a "point" is figured.  This is especially true with first-time home buyers.

 

     Here's what I tell my clients when starting this discussion ... 

     The best way to think of a "point" cost, is to remember a percentage point equaling the number 1 ... 

One percent (1%)  =  1 point

One percent (1%)  =  .01

 

     Then the cost of the "point" should be thought of this way:

Cost of Point  =  .01  X  Your Loan Amount

 

    

     Okay, let's put some actual dollar amounts into the equation.  It will make better sense to you.

 

     Let's say you are borrowing $200,000 for your mortgage.  One (1) "point" then costs you an additional $2,000 at Closing.

Here's the math equation for that:

.01  X  $200,000  =  $2,000

 

     The question I typically hear as a  mortgage lender  during these conversations is this ...  If these "points" COST me as a borrower ... why would, or should, I even think of buying them?  What does buying a "point" accomplish for me

 

     Think of "points" (and the dollars associated with them) as interest earned or paid to the bank.  The "reward" for you as the Borrower when buying that "point" is the lower interest rate received for the life of their loan at that bank.

 

      Alot to digest, isn't it?  It must be remembered too, that as the markets fluctuate, so does the benefit of paying a "point" ... and the resulting reduction in interest rate earned for doing so.

 

     As a rule ...

1 point paid  =  1/8% lower interest rate

 

      Again, let's revisit the math we did above for that:

$200,000 Mortgage

Paying 1 "point"

Cost of "point" equals $2,000

     

     Let's say, on the day this "point" and mortgage costs are being quoted to you, the interest rate is lowered by 1/4%.  We'll say from 4% interest rate to 3.75% interest rate.  The savings realized by the borrower each month (for buying a "point") is then $28.60.

 

     Now, there is one more very important thing to figure into considering a "point" purchase ... and whether it makes sense for you to buy the "point" for your mortgage.  And that's, how long you expect to be in the property you are buying or refinancing.

 

     Why does that matter?  Again, the numbers tell the story ...

 

     We now know that the amount you save in interest monthly for buying your "point" was figured at $28.60 above ... and that you will pay $2,000 at your closing to receive that monthly savings.  So to figure what your "break even" time is ... meaning the point where the savings in interest would equal the dollar amount paid on the "point" ... you do the following:

 

Amount paid for "point" ... $2,000

divided by:

Amount saved in interest each month ...  $28.60

Equals:  

70 payments

 

     Knowing how long it takes to payback the savings realized by paying a "point" is absolutely essential when making your decision to buy that "point" ... or not.  Then you simply need to consider if you plan on being in the property you are buying long enough to reach that "break even" time. 

 

     Helping you understand HOW the savings on "points" are figured ... and HOW buying "points" can affect your bottomline ... is an important part of my job, as your mortgage lender. 

 

     But the answer and decision is one that only you, the borrower can ultimately make.   I hope that this blog helped you do that ...

 

 

     *  Having an experienced, knowledgeable mortgage lender at your side during the many decisions your are called upon to make during your home buying is crucial.  Contact me today.  I'll put my 35 years of mortgage experience, knowledge, and expertise to work on your behalf.  I'll be very glad to hear from you.

     I can be contacted through any of the following means:

 Direct:  815.277.4036   Cell/Text:  708.921.6331

Email:   gene@chicagobancorp.com

Website:   www.genemundt.com

Skype:  630.219.1316

Click here 4 a: NO Cost NO Obligation Mortgage Consultation 

 

 

 

    

Financing Rates and Options

Depend on Knowing ... 

Condo or Townhome?

 

     The Scenario:

     A female applicant for mortgage contacts me as the result of a referral.  She says she has contracted to buy a townhome.  She has spoken to two (2) mortgage lenders prior to speaking to me (one a bank, the other a broker).  

     Can I quote her the mortgage program options available to her and also interest rates?  She also wants to know how Mortgage Insurance will impact her as she is placing only 10% down on her purchase.  

     My interest rate quote turns out to be 1/8% higher than the previous two lenders she has spoken with.  She asks why am I charging her a higher interest rate?  My quoted Closings Costs are comparable.

     The Facts ... 

     The answer to my young buyer's question lies in the FACTS  surrounding the property she is buying.  It is, in fact, NOT a townhome, as both the realtor and two other lenders assumed.

     The property was legally platted and developed as a condominium.  How do I know that it is legally a condominium?  I know how to find that information and I took the time to research the property and find that out.

     The Inevitable Question ...

     WHY the discrepancy in the quotes received then?

    Because the property is legally a condominium and was developed as such, it carries a higher cost of financing.  When the down payment is less than 25% and/or the loan-to-value is greater than 75%, that is the case.

     The cold hard truth is ... the marketplace, and many professionals within it, still do not know or recognize the difference(s) between the two types of properties.  They do not take the time to properly research it either.  And those differences can be HUGE and affect all the participants involved in a transaction.  

     In this particular instance, the buyer was receiving erroneous information based on unsubstantiated facts.  By getting the FACTS from me, my buyer found out the true and factual costs and interest rate surrounding her property purchase ... right from the initiation of our transaction together. 

     Because I knew the FACTS surrounding her property and purchase, I requested the proper financial documentation from the seller immediately.  I also asked that a condominium questionnaire for the property be completed.  And the proper info and requests surrounding a condominium appraisal were conveyed to the appraiser.  All of these actions greatly impact the timing of a closing ... which for this client was only 30 days away.

 

     The Outcome ...  

     A successful closing. On time.  And, my buyer fully understood the interest rate charged her, her loan fees, her Mortgage Insurance Option in detail, and the mortgage process itself.  Knowledge is powerful ... and it was key to my client's successful Closing.

     To Wrap it Up ...    

     The current lending environment is rapidly and continuously changing.  It is imperative that buyers protect themselves by working with a knowledgeable and experienced mortgage lender.  For my buyer, that meant the difference between receiving FACT or fiction ... and successfully closing her transaction on time.

     Financing rates and options depend on your knowing ... Condo or Townhouse?  Does your mortgage lender know the difference?  Does your agent?  Do they take the time and make the effort to find out? 

     If not, you're working with the wrong person ... 

 

 

 

       *  Thinking of buying a townhome or condo?  Work with a mortgage lender that has indepth knowledge and experience in real estate appraising.  My 20+ years of professional appraising background will serve you well during your buying experience.  Contact me today at any of the following to ask your questions or seek the experienced mortgage assistance you need and deserve:

Direct:  815.277.4036        Cell/Text:   708.921.6331       Email:  gene@chicagobancorp.com

Skype:  630.219.1316   Website:  www.genemundt.com

Click Here 4 a:  NO Cost NO Obligation Mortgage Consultation

    Her reply was, "I'm in a good place at my job now.  I have my down payment saved-up.  You and I worked on my credit and it's strong.  And the timing is good ... I just didn't want to miss out on the advantages of buying my home in this market."

    * Need some assistance and guidance in getting your ducks in a row?  Worked hard and accomplished that already?  Looking for advice or informational seminars?      Whether you're looking for some credit guidance, just want to polish your credit a bit, or are ready to buy ... with over 35 years of experience, I can help! 

 

New "We Care Card" Program Announced in DuPage Township (IL) 

Aims to Assist Township Residents Without Health Insurance

 

      A new beneficial health insurance option for DuPage (IL) Township residents was announced on July 26th, 2011, by DuPage Town Supervisor, Bill Mayer.  

     The new program, called the "We Care Card" Program, focuses on bringing health-care services to DuPage Township residents that don't have ... or can't afford ... health insurance. 

    This "We Care Card" Program could touch as many as 16,000 residents living in the township, and will offer a FREE initial health screening done by nurses of the Adventist Bolingbrook Hospital, located at 500 Remington Boulevard, Bolingbrook, IL.  The hospital is partnering-up with DuPage Township to deliver this much-needed new program. 

    The "We Care Card" Program is hoping to educate DuPage residents about the benefits of good nutrition and fitness, plus the need for consistent management of their health issues.  Through this initiative, they hope to reduce the number of residents that must visit hospital emergency rooms for more basic medical care.

    The DuPage Township has spent $20,000 to initiate this new program.  The township is alerting the 10,000 families and 2,000 senior citizens served by the DuPage Township's food pantry about the existence of the new "We Care Card" Program, but any DuPage Township resident can apply.   

     Officials believe that the dollars spent upfront by the Townhip will end-up being "re-paid" as residents are educated about their health-care issues and make fewer visits to the hospital emergency rooms.    

     Any DuPage Township resident interested in learning more regarding this new "We Care Card" Program ... or wanting to make application for a "We Care Card", should contact DuPage Township by phone at: 630.759.1317.  

     The DuPage Township offices are located at:  241 Canterbury Lane, Bolingbrook, IL.  Hours are:  Monday through Friday, 8:30 am - 4:30 PM.  (Closed Weekends and Legal Holidays)  You can also visit the DuPage Township website at:  http://www.dupagetownship.com/ .   

  

     *  If looking for a home or mortgage advice, guidance, or service in DuPage Township, or the surrounding area, please contact me at:  Direct:  815.277.4036  Cell/Text:  708.921.6331  Email:  gene@chicagobancorp.com   Skype:  630.219.1316  Website:  www.genemundt.com