|
Posted by Jeff Strickland on April 22, 2006, 6:26 pm
Please log in for more thread options
"Bill Poston" <poston8[at]comcast[dot]net> wrote in message
> Hi Jeff,
>
> Thank you very much for answering my pleas for help. You were very
> nice to reply in such detail. (somehow I deleted your advise after I
> read it)
>
> All of your advice was sound and I have basically followed your
> advice.
>
> I am getting a new mortgage on new house for $80,000 for 30 years at
> fixed interest of 6.250% and paying 1% points or 800.00. Payments of
> $492.58. All locked in for 60 days.
>
> Closing cost will be $3,315.50 which includes points and all costs.
>
> My son is *giving* me $130,000 before closing. I will *give* my son
> $130,000 when my present house is sold. My son is even considering
> buying my present house and keep as rental.
>
> Anyway, everything is working out great.
>
> Thanks again for your expert help and advice. You should really write
> a book. It is a shame that each lender speaks in their own language
> like: appraisal fee; application fee; processing fee; origination fee;
> and the price for each is just a little bit different for each lender.
> It is a headache to decipher each "Good Faith Estimate" which actually
> should be called "Catch The Loophole If You Can".
>
> I fired a bunch of them when they started to talk in the gobble gook
> like be sure and take your For Sale sign down before the appraiser
> comes out, pay for appraisal up front, etc. etc.
>
> Take care.
>
The Good Faith Estimate -- or Catch the Loophole If You Can Form -- is
actually quite easy to decipher. The most imoprtant number is the APR
(annual percentage rate). This number is the the Cost of Money number.
Essentially, one takes the non-recurring closing costs -- various fees --
and SUBTRACTS them from the actual loan, then calculates the new interest
rate using the same monthly payment. To make it simple, let's say you wanted
a loan for $200k, and closing costs were $5k. Assuming the interest rate of
6% on 200k, the payment is (rounded) $1200. But, you paid $5k -- either out
of pocket or from the loan proceeds -- so the net loan amount is $195k, but
the payment remains 1200, so the APR is really 6.24%. If you had multiple
Catch the Loophole If You Can Forms, the one with the lowest APR would have
the best interest rate. Keep in mind that the APR is not used to calculate
ANYTHING, it is only used to express the cost of borrowing the money. The
Note Rate is what is used to calculate the payments.
Good luck.
| 
XML Sitemap