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Buying a home is a big financial commitment for most people. It definitely pays to do it right the the first time. Here are some common missteps that homeowners make at every age group and a few tips on how to avoid them. 

20's something. Getting the wrong type of mortgage. 

People in this age group are just staring their careers and usually have less money and paying less for a mortgage is a necessity. They might get an Adjustable Rate Mortgage (ARM) thinking that they will earn more money down the road so when the ARM rate resets , they will have excess funds for
it. Adjustable Rate Mortgage seems attractive because the initial teaser rate is low compare to Fixed Rate.  However, if that promotion or salary increase does not happen and when the ARM resets, there is a chance that the borrower will no longer be able to afford their mortgage payment. Consider other alternatives to ARMs such as Fixed FHA loans, Fixed VA loans and GNND

30's: Not thinking about the future. 

Homebuyers in this age group may not think much about potential future family when buying a condo in a downtown Seattle with gorgeous views of the
Puget Sound. It's important to think that even if you are currently singe that you should ponder these questions: 
  • Who do I imagine living with in the future? 
  • Where do I imagine living? 
  • How do I imagine living? 
Those answers should be an integral part of what you look for in a home. For example, even if you think you might want kids or even a dog, you'll probably want to choose a home with a backyard instead of one near a great nightlife. 

40's - 50's: Overestimating your budget. 

People in these age groups are more financially stable and tend to have more money which can lead to overestimating your budget and buying a house you can't afford. Figuring out our budget is a critical step for buyers of all ages. Your budget should incorporate things that you aren't willing to give up and discretionary spending. Use this online home affordability calculator to determine how much you should spend. 

60's and up. 

Falling in love with that vacation home. Homeowners in their 60's are retired or getting ready to retire. While some choose to stay put, many plans on moving to warmer climates or even another country. 
Before buying a new home in your vacation paradise, be sure to visit the area in every climate. For example, Florida is great in the winter but may not be comfortable in the humid summer months. 

Posted by Sam Kader on July 23rd, 2018 12:50 PM

When people want to find out how much their mortgage cost, we are required to provide quotes that include loan rates and points. What exactly is a point? A point is a fee equal to 1 percent of the loan amount. For example, a 30-year fixed loan at $150,000 with a rate of 3.5% and a charge of 1% or $1,500. 

Do I have to pay points? Not everyone has to pay "Points" but depending on the loan program, "Points" maybe an automatic charge. For example, Fannie Mae will charge "Points" on all Fannie Mae backed loans unless your down payment is 40% or more no matter how good your FICO score are. Points can be good points and bad points. Bad points are Points a borrower has to pay in the form of a penalty such as:

  1. Low Credit Score
  2. High Loan-To-Value
  3. Type of Property
  4. Investment Loans

Bad points can also be found on Government loans like FHA, VA, & USDA. Borrowers are not getting anything in return for this additional money they have to pay. Bad points are a penalty that is imposed on the borrower because they or the property they are purchasing present a high risk. 

Points can be good such as when a borrower pay "Discount Points" to lower his/her interest rate. These are "Good Points" because they lower the borrowers interest rate and it's discretionary (not penalty).  For example, a lender might offer a 30-Year Fixed of $165,000 at 6% with 0 points. The monthly mortgage principal and interest payment would be $989. If you pay 2 points at closing or $3,300 - you might be able to drop the interest rate down to 5.5% with a monthly payment of $937. The savings difference would be $52 per month. However, it would take 64 months to earn back the $3,300 spent upfront on discount points. If you are planning to stay put for at least 5.5 years - then you save money by paying the points. Furthermore, this kind of point is tax deductible.

Good points can be received in the form of a credit. For example, a borrower can choose to receive a higher interest rate in lieu of lender credit towards closing costs.

Posted by Sam Kader on October 25th, 2017 10:18 PM



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