We’ve been looking at finances.

All his week we have looked at finances as a part of your home project.  Let’s face it without the money to pay for your new home it simply is not going to happen.  Putting your finances in order can be done quickly or it can take a year or two.  With proper planning, you should be successful.  Remember, it all starts with The Bank.

Let’s pretend that your construction loan has been spent and your new home is now finished.  This is the moment it all turns into a mortgage.  There are factors to consider:

What is the percentage of your mortgage loan?

  1. Percentage Rate – this is the number represents the cost of borrowing money, it is typically the most widely used number but, it is not necessarily a true reflection of what borrowing money will cost you. 
    1. 30 year fixed Percentage Rate currently is 4.625%
    2. 15 year fixed Percentage Rage currently is 3.375%
  2. Annual Percentage Rate – The APR.  The APR is more accurate in that it includes all those magical fees that magically appear.  The APR is the Percentage Rage plus the fees
    1. 30 year Fixed APR -  5.65%
    2. 15 year Fixed APR – 3.463%

Those numbers are accurate as of TODAY and are constantly changing. 

When you enter into a mortgage take a very long look at the fifteen-year loans. In today’s numbers, the difference is two percentage points.  That can make a huge difference in the monthly payment.  Check it out!

Points – what are points?  A “Point” is one percent 1.0% of the total loan and it is a bank fee or bank profit or money charged to off-set other fees.

Points can and are used to gain a lower interest rate.  It all gets complicated but a good banker/lender should go through everything with you.  Don’t forget The Truth in Lending Act is there to protect you, lenders are required to disclose all the costs to you. 

If you feel as though things aren’t being explained carefully or if you think someone is trying to pull a fast one on you, we suggest you look for another bank.  Don't gamble

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