12 September 2007
Foreclosure doesn't just happen to people who don't make their mortgage payments. Your homeowner's association (HOA) can take your house or condo if you're not careful. In one case, a disabled California man lost his home in a foreclosure sale because he was $123 behind on his homeowner's dues. The house was worth $280,000. Unfair? Abusive? You bet!Read More »
Falling Mortgage Rates a Bonus for Buyers
By Richard BarringtonNFNS Columnist
Sorry to buck the
trend of all those reporting gloom and doom for the housing market, but there
is an honest-to-goodness positive development out there, especially for buyers.
Mortgage rates have continued to fall from their highs last year, making new
home loans measurably more affordable.
The Effect of Mortgage
Rates on New Home Loans
Perhaps the problem is that one half of one percent just
doesn't sound dramatic enough. Let's put it another way: on a $200,000, 30-year
new home loan, a .5% reduction represents a yearly savings of nearly $800. That's
enough to take a meaningful bite out of closing costs.
Better yet, project $800 out over a 30-year mortgage, and
now you're looking at $24,000 in total savings. Sounds a bit more exciting than
half of one percent, doesn't it?
Closing Costs and
Other Budgeting Considerations
As mentioned, even the first year savings can help offset a
portion of closing costs, and that brings to mind some simple rules for budgeting
for a home purchase.
This budgeting process comprises two phases: you need to
save up in advance for your down payment and closing costs, and then you need
to make room in your budget for your monthly payments. You can combine these
two phases if you save the upfront money by setting aside at least enough every
month to make the payments on your projected new home loan.
This way, you'll know that you not only have set aside
enough to make the initial purchase, but that you have room in your budget to
keep up with your mortgage. After all, as focused as home buyers are on
initiating a new home loan, paying off that mortgage is the ultimate goal.
Source:
Freddie
Mac
About the Author:
Richard Barrington is
a freelance writer and novelist who previously spent over twenty years as an
investment industry executive.
About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.