When you buy a home with a 30 year mortgage, do you ever really plan to stay in that home for 30 years and see that mortgage completely paid? Probably not. NAR tells us that most people move every 5-7 years on average. These days, I’d surely reccomend staying in your home for at least 5 years but everyone has different cirecumstances and different mortgages make sense for different life stages. At the closing, there is a document that you have to read and sign that has the figure you would pay if you paid off the entire mortgage. For examply, if you had a $100,000 mortgage, maybe it would alert you to the fact that you’d be paying $130,000 or more over the life of the loan. It’s scary stuff. Here’s Dan the mortgage man….

Posted on June 8, 2010

Read the complete post

Each Thursday, Freddie Mac publishes a “national” mortgage rate.  It’s based on a flawed methodology, but nevertheless, the national rate is the rate upon which most newsfolks based their mortgage market stories.

Ergo, it’s important.

The Mortgage Rate Headlines Don’t Mention “Points”

Lately, mortgage rates have been falling.  The 30-year fixed made new lows in late-May and the 15-year fixed continues to drop.  The same is true for ARMs. It doesn’t mean that mortgages are getting cheaper, however.

Despite mortgage rates falling, closing costs are up. Versus 4 weeks ago, a new conforming mortgages will cost you 1/10 percent more, or $100 per $100,000 borrowed.

In mortgage parlance, this is called “discount points”. As banks lower their rates, they’re raising their fees.

The Long-Term Cost Of A 30-Year Fixed Rate Mortgage

Over time, the cost to “pay off” a fixed rate mortgage is more than just the amount borrowed. Interest payments have to be accounted for, too, and it can put a dent in your household budget.

Based on mortgage rates, the interest cost of a 30-year fixed mortgage can really pile up.

• With an interest rate of 5.250%, it costs $600,000 to pay off a $300,000 loan
• With an interest rate of 9.375%, it costs $900,000 to pay off a $300,000 loan

Now, we haven’t seen 9.375 percent interest rates since 1994, but plenty of people in Cincinnati remember them (and worry they’ll come back soon). And rates did touch 7 percent just a short while back in 2006.

With respect to recent mortgage rates, though, the difference in loan costs has been equally stark.  Versus 1 year ago, the cost of carrying a 30-year fixed rate mortgage to full term has dropped by $60,000.

It’s down $21,000 since the start of the year — even as “points” are rising.

Locking In Your Low-Cost Mortgage

When we talk about home affordability, it’s stuff like this; long-term mortgage costs dropping; home values in a trough; cheap lumber and labor.  It’s an excellent time to buy a home, all things relative.

It’s a good time to refinance once, too — especially if you can lower your long-term loan cost by $60,000.

To get a free, no-obligation quote on your mortgage, click here to send me an email.  Or, you can call me — whichever is easier.  I answer all my calls and all my own emails.  I’m happy to talk with you about your plans.

Just remember, though…..(see above for link to Dan’s Post)