estar mortgage: How to Understand Annual Percentage Rate (APR) on Your Mortgage Loan
- 12/26/18 07:32 AM
The federal government requires mortgage lenders to disclose the "annual percentage rate" (APR) whenever they advertise a loan program. But what is APR, and does it really matter to you? Here's the thing: APR lumps all your "finance charges" into your interest rate. As you can see from the list below, some of your closing costs are considered "finance charges." APR is calculated by adding all these finance charges to the total interest that you'll pay over the life of the mortgage. An annual interest rate is then calculated based on that total number. APR Closing Costs & Prepaid Items … (1 comments)
estar mortgage: How to Improve Your Balance-to-Limit Ratio
- 12/10/18 09:39 AM
Your balance-to-limit ratio looks at the balance you owe vs. your available credit lines. This has a 30% impact on your score. Keeping your credit balances below 50% of your available limit is very important. Keeping your balances below 30% of your available credit is even better. For instance, if you owe $10,000, and you have $100,000 of credit available to you, you are only using 10% of your available credit line. On the other hand, if you owe $10,000 and you only have $10,000 available to you, you have "maxed out" your available credit and your credit scores will be … (1 comments)
1 - How do ARMs work? Most ARMs have an initial note rate that is fixed for a period of time... usually 3, 5 or 7 years. See Figure 1 for details.
After the initial fixed period, your mortgage interest rate would change based on adding the then-current index, to the margin. See Figure 2 for details. It's important to pay attention to the "caps" on your loan because these caps indicate how much … (1 comments)
Why Do Appraisals Matter? Mortgage lenders base your loan amount on the LESSER of the appraised value or the purchase price. Here's an example: You sign a contract for a $200,000 home with a $10,000 (5%) down payment. Your loan amount, in this case, would be $190,000 (95% of the purchase price). The appraisal comes back at a value of $190,000 The mortgage lender is no longer willing to lend you $190,000 because that would … (2 comments)
$15,000 Annual Exclusion The federal government gives each of us an allowance to gift anybody $15,000 per year without incurring any gift tax. This $15,000/year replenishes every year, and it’s $15,000 per person. So, theoretically, I could gift every person that I know $15,000 today, and then another $15,000 next year and the year after, and there would be NO gift tax.
$11,180,000 Lifetime Exclusion What most people don’t realize, is that there’s a second allowance of $11.18mm! In other … (1 comments)
estar mortgage: 3 Trends that Could Impact Real Estate Investors
- 11/05/18 06:10 AM
1 - Less new construction of homes at lower price points Home builders across the country are reporting that the high-costs of lumber, and the increasing costs of getting building permits approved, have lowered their profit margins and reduced their incentive to build starter houses at lower price points. This means that first-time homebuyers have less inventory to choose from when it comes to buying their first home. Less supply means higher prices, and this could be a good thing for real estate investors who jump into the market now.
2 - Investors are less likely to rebuild after … (2 comments)
estar mortgage: 3 Reasons Why Homebuyers Should Consider Seller-Paid Points
- 10/29/18 04:49 AM
"Seller-paid points" are where the seller pays points to reduce the interest rate on your mortgage. Consider a home where the list price is $300,000 and the seller is willing to accept a bottom line of $291,000. If the seller reduces the price by $9,000, you would be able to purchase the home for $291,000. Both you and the seller would be happy. However, what if you purchase the home for $300,000 and ask the seller to contribute $9,000 toward your closing costs? The seller still walks away with his/her bottom line of $291,000. However, there are three extra benefits … (1 comments)
estar mortgage: How to Get the Primary Residence Capital Gains Tax Exclusion
- 10/23/18 07:30 AM
In order to understand capital gain, we first need to understand tax basis. Your tax basis is the cost of buying, building or improving a property. Assume you pay $200,000 for a property. You incur $5,000 in closing costs. Then you spend $45,000 on home improvements. In that case, your tax basis would be $250,000. That’s what it cost you to buy and improve the property. Assume you later sell the property for $500,000. You incur $50,000 in sales commissions, transfer taxes, and other sales expenses. You then subtract your $250,000 basis. Your capital gain would be $200,000. Once you … (2 comments)
estar mortgage: Why Do I Have to Pay for a Rate Lock Extension?
- 10/01/18 05:46 AM
Why Do I Have to Pay for a Rate Lock Extension? Here's the scoop: mortgage rates are determined by mortgage bond prices. Mortgage bonds trade in what's known as a "To Be Announced" (TBA) market. When you commit to a rate lock, the lender is agreeing to deliver your mortgage to the bond investor within 30 days, 45 days, etc. That's where rate lock timeframes come from. So in essence, bond investors are trading empty buckets of mortgages that are scheduled to be filled within certain timeframes.
When your mortgage loan takes longer than expected to close, the mortgage lender … (1 comments)
The federal government requires mortgage lenders to disclose the "annual percentage rate" (APR) whenever they advertise a loan program. But what is APR, and does it really matter to you? Here's the thing: APR lumps all your "finance charges" into your interest rate. As you can see from the list below, some of your closing costs are considered "finance charges." APR is calculated by adding all these finance charges to the total interest that you'll pay over the life of the mortgage. An annual interest rate is then calculated based on that total number.
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