Category: Buyers

By Posted on Posted in Buyers No Comments Tagged with , ,
Feb
2
2009

the_thinking_capPoints are the closest thing to legalized bribery!   When applying for a mortgage to buy a house, you can pay the lender a fee to get a better interest rate.   The fee is called a point and is 1% of the amount you borrow.   You could pay one or many points.   The point costs you money upfront but the lower interest rate saves you money each month on your payment.   So, the trick is to calculate the breakeven point.   In other words, how long will it take you to recoup the upfront fee in monthly savings on your payment because of the lower interest rate.   Simply calculate the payment for two interest rates and find the difference, that’s your monthly savings.   Then divide the amount of the points by the monthly savings and the answer will be the number of months to breakeven.  Your decision on whether or not to pay points will depend primarily on how long you plan on living in the house.   Also, if you think you’re likely to refi in the near future, you might not want to pay the points.   Points are usually tax deductible on a home purchase but on a refi they may need to be deducted over several years.
Thanks for reading,
Joe

By Posted on Posted in Buyers No Comments Tagged with ,
Feb
1
2009

moneyhouse2Even though there are tons of mortgage calculators on the web, here’s a quick and easy way to ballpark your monthly mortgage payment in your head.    If the house is $200,000, just multiply by 10% and subtract “a little bit” So, your payment should be a little under $2000/month…maybe $1700/month would be a good guess, depending on the taxes and interest rate.

If you don’t mind a little math, you can use interest rate “factors” to make this simple and this is the only part you’ll need to memorize…. if your interest rate is 5%, the factor is 5.37. If the rate is 6%, the factor is 6. If the rate is 7%, the factor is 6.65.

Now, multiply the factor by how much you want to borrow…. for example, $200,000 at 5% rate, is $200 x 5.37 equal $1,074/month. Don’t forget, you also have to pay property taxes, homeowners insurance and private mortgage insurance (PMI or MIP) if you put less than 20% down.   Take the annual taxes dived by 12 months and add that to the payment, let’s guess $5400/year or $450/month… a nice round number 🙂    Estimate your homeowners at $4 for every thousand of purchase price, so $4 x 200 that’s $800/year or $67/month and add that too. So that’s $1074 plus $450 plus $67 equal $1591 and let’s add $100 for PMI (I’ll show you how to figure that later) so were up to $1691/month.

So, use a calculator, or ballbark it right in your head…. Hope that helps!     BTW, if you want a 15 year loan or different interest rates, just google “interest rate factor” and you’ll see everything you ever wanted to know.
Thanks for Reading,
Joe

By Posted on Posted in Buyers, Sellers No Comments Tagged with , , , ,
Jan
29
2009

It’s a question that I get all the time…. but what’s the REAL question? Maybe some people are just making small talk because they know I’m a broker but many, I believe, want to know if it’s OK to buy a home. Watching the news is scarey and there’s no question-mark1shortage of uncertainty in the real estate markets, so what’s the right thing to do… buy now or wait til the market hits bottom?

Well…. How will you know when the market hits bottom? Will you rely on the nightly news? When will THEY know? Home sale statistics don’t come out for a few months AFTER the fact… so you won’t know we hit the “bottom” until AFTER it’s past…. then you’ll be buying on the way UP! That’s not good either.

Here’s the short answer. Buy now for the long term. That’s it. It’s that simple so let’s not overcomplicate it. If you’re not ready to own the property for the next 3 to 8 years, don’t buy it. If you are ready, then it’s an absolutely GREAT time to buy a property. Prices are down, there are fewer competing buyers in the marketplace, interest rates are very very good, and there’s a bigger selection of homes by double.

The truth is, most people buy or sell when it’s the right time for them and their family, not based on the market conditions. It would be silly to move and rearrange your life every time the market moved one way or the other. Buying and selling a home takes a lot of time, costs a lot of money and by it’s very nature, should be a long term decision.

The Conclusion? If the time is right for your family, 2009 is the right time to buy a home in the south jersey real estate market. It’s OK… and tell ’em I said so 🙂

Thanks for Reading,
Joe Montenigro
REMAX Home Team

By Posted on Posted in Buyers No Comments Tagged with , ,
Jan
9
2009

I was talking with buyer recently who was looking for a home in my neck of the woods in South Jersey and he made some comments that he though all bank owned properties were in bad condition… the technical real estate lingo is toilet 🙂 ha ha     …but it’s just not true.    toilet1

South Jersey REO

In the South Jersey real estate market you see a wide variety of homes that are bank owned.   While I’ll agree, that most of them are dirty and even a little ugly, many of them are not that far from being pretty darned nice!    And they’re in all different price ranges and locations…. I’ve seen many REO’s in the $300k to $500k range in South Jersey.     As an experienced REALTOR, I’d say many many home buyers can and SHOULD consider buying bank owned properties so long as they have the correct expectations.    Later, I’ll write more on the advantages and disadvantages of buying a bank owned property.