every $100,000). Essentially, you pay some interest upfront in exchange for a lower interest rate over the life of your loan. In general, the longer you plan to own the home, the more points help you save on interest over the life of the loan. For example, you can go online or into a mortgage professionals office and get an amortization chart. This chart can show you the difference if you pay points or not and if the savings are worth it depending on how long you plan on being in your home. Your lender can also provide this. It’s possible to buy the points to ensure the interest rates are low when you’re getting the loan. Buying the points can help you down the line by guaranteeing that you save money, especially if you plan to stay in the house for an extended period. However, the amount of cash you’ll save by buying the points depends on the number of points you buy. For instance, if your mortgage is $200,000 and you buy two points, you will owe $4,000 when closing. Depending on where rates are and the cost to buy them is important to understand and decide if it is right for you. Further related to taxes and property ownership is that once you own a house, you’re a property owner, with the obligation to pay property taxes. The usual method of paying property taxes is to escrow the amount of annual taxes within the mortgage payment. The mortgage servicer will pay the taxes as they are due. If you have 20% or more equity you can usually decide if you want control of paying them or having them in your mortgage. When buying a house, your lender will calculate the total amount of real estate taxes, as well as the number of days in a property tax year that you were the owner of the said property and escrow that
66
Powered by FlippingBook