Trying to Save Money on a Loan Can Be Costly

Our client found the perfect home for an incredible value.  We negotiated the sale and a fabulous offer was secured for our buyer.  He had instant equity upon closing.  But the sale never closed.  

We'd recommended lenders to him, but he chose to use another lender.   Why?  Because he would save $1000 in closing costs. 

Unfortunately, this lender rarely spoke to the buyer and would not return our phone calls.  Without this communication, it was clear what was happening.  Nothing.  After two weeks, our client got nervous and decided to switch to a recommended lender.  This lender was getting the job done, but having lost the first two weeks of the transaction time, this lender asked for a week's extension. 

The seller refused to extend the closing date to accommodate the extra needed time for financing.  He decided he'd sold his home for too low of a price and he could get more money for his home.  He wanted to put his home back on the market.  Our buyer lost this fabulous home and the equity he would've had if he'd been able to close the sale.  The equity he lost was worth far more than the $1000 he could have saved on the loan.

It's always important to work with a lender who'll get the job done for you.  It's even more critical in our fast paced market.  Sellers may not be inclined to let you change lenders or extend the closing time.  If you change lenders after the offer has been accepted, the seller has to agree in writing to the lender change.  You, as the buyer, can't just up and change lenders without the seller's permission, as you could be in default on the contract and lose your earnest money.*   What if you need an extension?  The seller also has to agree to any extension to the closing date.  If the seller doesn't agree in writing to an extension, then the offer dies on the original closing date and the seller is free to sell the home to another buyer. 

Keep in mind how important it is to use a lender with fair pricing, but also a lender who has a proven track record to get the job done.  Get referrals from your Realtor, friends or family.  Choose a known quanity to do the job.  You could lose a lot more than $1000, you could lose the home you want to buy.

 

*As always, with any legal issues, it's important to seek the appropriate legal advice from an attorney.

 

Posted on July 22, 2013 at 5:48 am
The Beaupain Team | Category: For Buyers, Mortgages, Real Estate | Tagged , ,

Buyers, Interest Rates Are Hot!

After I wrote my last post on the state of the Seattle eastside real estate market, I felt it important to remind buyers that even though it's a seller's market, Interest rates are hot!  Interest rates are on your side.  Prices are starting to increase, while interest rates are still on the incredibly low side.  It's a recipe that calls for action, for not sitting on the fence and for making a move.  Literally.

Posted on March 1, 2013 at 11:25 pm
The Beaupain Team | Category: Financing, For Buyers, Mortgages, Real Estate | Tagged , ,

Want to Save Money on Your Mortgage?

Save Money
Twenty percent of the country is having financial difficulties with job and home losses
, according to Greg Heberlein, the financial commentator at KPLU.  The news has been so focused on the difficult economic situation and in real estate on short sales, foreclosures, declining home values.

What about the other 80%? We often forget about what’s happening with the other 80% of the population.  These people need to think wisely and make some solid financial decisions. If you own a home, Greg Heberlein recommends making an additional mortgage payment each year. You can drastically cut down the time you’re paying your mortgage, PLUS save a lot of money. We’ve heard this before, but it hasn’t been mentioned in a long time.  It’s good financial advice.

Here’s a few key thoughts from his talk:

  • One payment a year can lower a 30 year fixed mortgage by as much as 8 years.
  • One payment a year can lower a 15 year fixed mortgage by almost 5 years.
  • Despite the tax deduction, you’re still better off being as debt-free as possible.
  • The last 3-6 years of a mortgage payment have such a small interest amount, it often doesn’t allow for a deduction anyway.
  • By being as debt-free as possible, it increases one’s cash flow.


Posted on September 28, 2010 at 1:49 pm
The Beaupain Team | Category: Financing, For Buyers, For Homeowners | Tagged , , ,

Should You Consider The FHA ARM Loan?

An FHA ARM loan?  With such great 30 year fixed rates?  In this day and age of great interest rates, few home buyers think of purchasing a home with an ARM (Adjustable Rate Mortgage) loan. Steve Tedrow of Windermere Mortgage Services talks about why he thinks the FHA ARM loan works for some buyers.

There is much negative publicity about ARM loans.  But, did you know that the FHA 5 year ARM has many advantages which could enable a buyer to buy more or save more in their monthly payment.  One of the  unique features to an FHA ARM is that the adjustment cap after the initial 5 year term is only 1%.  Compare a 5 year ARM at todays’s rate of 2.875% versus a 30 year fixed rate mortgage at 4%.  If you assume a worst case scenario, the average interest rate over 9 years is 3.99% on the ARM.   Many first time home buyers do not plan on staying in a property more than 5-6 years.  The FHA ARM could save them thousands of dollars over this time frame.

Maximum FHA ARM Loan increases over 9 years

Maximum Increase in FHA ARM interest Rates Over 9 Years

Or, it could allow them to purchase a more expensive property without increasing your monthly payment:

Example of increasing your purchasing power with FHA ARM

Increase Your Purchasing Power With FHA ARM

You can contact Steve or your loan officer to learn more abut FHA ARMs.

Posted on September 23, 2010 at 1:11 pm
The Beaupain Team | Category: Financing, For Buyers, Real Estate | Tagged , , ,