Deanna Valeo

Should you Pay Points on your Mortgage? June 19, 2014

Paying points, or an origination fee, is something that as a homeowner, you may consider doing.

In general, if you choose to pay a point on your mortgage loan, you will have a higher up-front closing cost but will instead get a lower interest rate. Typically, a 'point' is equal to 1% of the loan amount and it will lower your interest rate by 0.25%-0.5%.

If you plan to stay in your home and keep your mortgage for a long time, then deciding to pay points might be best, as you will save money every month on your mortgage payment. However, if you aren't sure how long you will stay in your home or don't have the extra money at the closing, you can choose not to pay any points you will get a slightly higher interest rate but will end up having extra funds in the bank after closing.  This is something I can advise you on when we meet.

Additionally, a purchase contract can be written so the the seller will pay the buyer's closing costs and in this case, a buyer can get a lower interest rate by having the seller pay a point on the buyer's behalf. A good realtor will suggest this.

The easiest way to judge if you should consider paying points is to look at the Total Cost, amount of interest and closing costs combined, of your mortgage over time.

total_cost_of_paying_pointsFor example, if you have purchased a $300,000 house with a $240,000 30-year fixed-rate mortgage, paying a point will lower the interest rate from 5% to 4.75% and will cost $2,400.The Total Cost over 5 years (on the left) shows that with lower interest and higher closing costs, the homebuyer only saves $578!

Here, paying points only lowers the monthly payment by $36.While a lower interest rate sounds appealing, saving only $36 a month may not be worth it, so as a homebuyer, unless the seller is paying the points for you, it may be in your best interest not to pay points.

While some mortgage lenders require you pay points on your home mortgage loan, I show customers both options and let them decide. When deciding what to do, don't be distracted by lower interest rates but instead look at the Total Cost to decide if the money is better used as closing costs or to keep as an savings and emergency fund
Speak with a mortgage professional today to complete a total cost analysis or to discuss all of your home buying options. 

Call me today to get started or schedule an appointment to really look at your financial plans and help you make the best home loan decision, or simply fill out my online application to get started.

Orginal Article here

Insure your Home the Right Way June 27, 2014

As you move through different stages of life, it is important to protect the things you work hard for such as cars, homes and valuables. Your home is likely your biggest financial investment, so it is important to properly safeguard it with homeowners insurance. Insurance safeguards your interests from uncertainty; it provides you with safety, security, and peace of mind. It also offers a level of protection against unexpected loss of property and personal belongings.

Researching homeowners insurance can be tedious and many homebuyers have policies they purchased with their first home, as lenders generally require that you obtain it as a condition of the mortgage. Often, too many people forget about their policy and mechanically pay their monthly premium. As premiums rise, it can be hard to keep track of just how high and often they increase.

It is important that you take the time to look back into your homeowner's insurance policy to see if it still fits your lifestyle and budget. Contact an insurance professional to make sure that your policy is still working for you, that your coverage is the best available and at the right price.

Making sure you find the best coverage, will take some time and personal consultation, as your insurance premium is determined by several variables.

  • The location of your home is an important factor as some areas have a higher level of risk for flood, wind damage or crime rate.
  • The age, size, and construction type of the house as well as the replacement value
  • The value of your personal property and the amount of personal liability coverage you have
  • Changing legislation regarding insurance
There are many variables that can require additional coverage that you may not be aware of. It is not always common knowledge that owning a trampoline or certain breeds of dogs, or changing your alarm system can alter your homeowner's insurance coverage. Though there are certainly ways to lower your homeowner's insurance costs, saving money won't matter if your policy is not providing you with the right coverage.

It is critical that you don't just research insurance online but that you frequently sit down with a local professional who can help you protect what you have and what your future holds. The right insurance agents will ensure that you have the right type and amount of coverage for the best price. The security of insurance, whether it is disability, auto, health, homeowners, life, or any other, will banish fear and uncertainty of anything beyond your control. I have excellent insurance partners that I trust and would be happy to refer you. Contact me for more information.

Original Article here