Yesterdays Stansbury Park blog featuring Fieldstones New Home ad offering $100 move in costs had some small print that have prompted some calls. People want to know what it means !!!
Lets look at the ad. It reads...$100 MOVES YOU IN WITH A 3.875% INTEREST RATE.
The small print says... see sales counselor for details, 30 yr conventional flex loan, 2:1 buydown.
Generally people are asking two questions. I'll try to answer as simply as I can. Keep in mind, I am not a lender, I don't even play one on T.V. I just have experience !!! ... This is how I see it.
1. Question:..... Why am I getting such a great interest rate.? Answer:... The builder, (Fieldstone) acquired, probably bought, a large block of money for it's buyers with an interest rate of 5.875 for 30 years. In addition, the builder is prepaying the interest, or buying the interest down 2% the first year, and 1% the second year. The interest that you would pay then is 3.875% the first year. (5.875 - 2%). The second year, the interest you would pay would be 4.875%. (5.875% - 1%). After that, interest is fixed at 5.875 for the balance of the loan. (28 years)
2. Question...... Will I be able to afford the adjustment when it happens? Answer.....The loan payments do not adjust. Your payment was always based on 5.875% amortized over 30 yrs. Remember, the builder paid the difference in payments up front for you. You will know what your payments will be the minute you make your deal.
Example: ... Mortgage amount, $200,000 thousand, for 30 years.
Monthly Payment:.......... $1184.00
Thats the monthly principle. and interest payment you need to evaluate the purchase against. If you can make that payment comfortably then you might want to make a deal. If the payment is more than you feel you can afford after plugging in taxes and insurance (H.O.A.dues if your buying a condo) then the sensible thing is to back off and look at something with a payment you would be comfortable with.
So thats the story, sorry I caused such a confussion. But thanks for letting me know I had.
One good thing from this is that I think you will all agree, since it's FREE, you should have your favorite experienced Real Estate Agent watching your back as you evaluate the many offerings out there. Now is a great time to buy, and I'd like to be In your corner.
To see why you need representation stop by my website @ New Homes and have a look. Or you can call us at 435-840-5029.
Remember, I'm the guy that let you know that the Stansbury Park New Home ad had some small print.
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