A lot is happening in the financial markets and honestly, some of it is good for the consumers. If you have stable employment, and if you are paying high rents to live in some one Else's home, and if you have managed to keep you credit score from dipping into the very lowest "bad" category, YOU SHOULD BE BUYING A NEW HOME OR REFINANCING your current home(for you owners out there), in most cases.
I am not a mortgage banker, broker, or lender. I am not licensed or certified to any degree in home financing. I am however licensed as a Real Estate Sales person and I am also a licensed Financial Services Provider both in the State of Arizona. I am working towards, and one day plan on, becoming an actual CFP "Certified Financial Planner." I just wanted to disclose that initially so that everyone is aware of position/stance from which I speak in this two-part post (maybe three-part...we'll see).
As with most things in life, your specific and particular circumstances may all vary to one degree or another and in an infinite variety of different ways. Having said that, the "concepts" which I am going to discuss are fairly 'defined' standards themselves, without attachment to any person or situation.
We all get enamored and excited about the many advertisements and marketing about ZERO% Interest, LOW-DOWN payment, and many other messages planted in our everyday lives. These messages are by design, in most cases, supposed to get us in the mood to buy, feeling like we got a great deal. But, even while you are enjoying all that "feel-good" euphoria from the exciting marketing, make sure you always know what the 'bottom line' is before jumping in. Or, you could very easily be hurt from diving into the 2-foot kiddie pool with not enough water to brace you....just because someone placed a nice diving board there and said jump!
My point in this first segment was to let you become aware of the fact that the interest rate...any interest rate...is NOT the bottom line. The acronym for that is APR. And there are often additional third-party fees that make the APR not the "very bottom line." Before you BEGIN shopping for a home, you should know that the interest rate is only the percentage of the loan amount that the bank is charging you to borrow money. We know that the borrowed money is not all we are charged for (now we do). You may have heard of 'origination fees,' 'lending fees,' 'points' (explained in segment 2), and other mortgage-speak costs. These additional costs are added in with the Interest rate number and reveal a more realistic rate total. And even the reality of the APR number can be "unreal" when dealing with varying Adjustable Rate Mortgages, ARMs.
My point in this segment was simply to help you gain the knowledge to know that you MUST ask the next person, bank, or business to offer you THE GREATEST INTEREST-RATE EVER!....What is the actual APR, and the bottom line, if there are additional third-party fees.
In the next segment, I'll recap "interest-rate" and explain Annual Percentage Rate (APR) in greater detail.
Please post your comments questions and feedback. It is all welcomed and greatly appreciated.
Thomas S Moore III
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