Purchasing a Home

[nelson9995]

I haven't read this thread but here are my tips. many of you may not know this.

banks sell interest points. I rather much do this than do a down payment. let's say you get approved for a 6%; and let's say that bank sells each point for $3000. That means that with $9000 cash, you can bring your permanent interest rate to 3%.

I would also look for houses under foreclosure (much cheaper)

and....

when making the payments, call the bank and set up to where you make half the payment every 2 weeks. If your mortgage is $800 a month, you would pay $400 every 2 weeks. By doing this, you are killing the interest rate. Interest rate can only be charged once a month so the interest will only be charged on one payment. The other payment, the complete $400 go straight to the capital. My parents do this. The bank doesn't tell anyone because they lose money. The bank told them after setting it up, that he had just cut the 25 years he had left to something alone the lines of 18 or 17 simply because more money is going to the capital versus interest.


YES YES and YES this is all 100% true and verified.

Sorry for any typos. I'm in a hurry

[bu villain]

Buying points is not necessarily a good idea. If you plan on staying in the home for only a few years, a 1% or so interest rate difference is not going to amount to much at all. You may be better off investing that money in other financial vehicles. Like most finanace, you have to figure out what your plans are and then run the numbers to see what makes the most sense.

Also I think you are mistaken about bi-weekly payments. You are implying that they effectively lower your interest rate just for splitting your payment in half. The real savings from bi-weekly payments is because you are effectively making an extra monthly payment every year which goes straight to principle.

Monthly payments: 1 year = 12 months = 12 full-sized payments
Bi Weekly: 1 year = 52 weeks = 26 (half-sized) payments = 13 full-sized payments

So bi-weekly payments are basically the same as monthly payments if you just pay an extra payment toward principle during the year. Run the numbers on an amortization calculator and you can verify it. If the bi-weekly format is easier than making an extra payment during the year, then go for it but the amount you pay in principle and interest would be almost exactly the same.

[blaknoize]

Buying points is not necessarily a good idea. If you plan on staying in the home for only a few years, a 1% or so interest rate difference is not going to amount to much at all. You may be better off investing that money in other financial vehicles. Like most finanace, you have to figure out what your plans are and then run the numbers to see what makes the most sense.

Also I think you are mistaken about bi-weekly payments. You are implying that they effectively lower your interest rate just for splitting your payment in half. The real savings from bi-weekly payments is because you are effectively making an extra monthly payment every year which goes straight to principle.

Monthly payments: 1 year = 12 months = 12 full-sized payments
Bi Weekly: 1 year = 52 weeks = 26 (half-sized) payments = 13 full-sized payments

So bi-weekly payments are basically the same as monthly payments if you just pay an extra payment toward principle during the year. Run the numbers on an amortization calculator and you can verify it. If the bi-weekly format is easier than making an extra payment during the year, then go for it but the amount you pay in principle and interest would be almost exactly the same.

My aunt does this with her mortgage. However, she pays two full payments bi-weekly.

[bu villain]

My aunt does this with her mortgage. However, she pays two full payments bi-weekly.

This actually reminded me. You should always look at 15 year mortgages when buying. Since they have lower interest rates, they aren't that much more monthly than the typical 30 year and if you can't afford a little higher mortgage payment, you should really consider whether your buying too much house.

[blaknoize]

This actually reminded me. You should always look at 15 year mortgages when buying. Since they have lower interest rates, they aren't that much more monthly than the typical 30 year and if you can't afford a little higher mortgage payment, you should really consider whether your buying too much house.

I heard that the banking world rarely offers such loans. I'd love to have a shorter more expensive loan. Get that over with.