• Look For The Suitable Orlando Mortgage Loan For Your Needs


    A "mortgage point" is equal to 1 percent of the loan amount, and is also at times paid to obtain a lower interest on a house loan. Orlando mortgage borrowers could also sometimes choose to take a slightly higher rate and receive a credit from the mortgage company to pay for some or all of the settlement costs on the loan. It can be a tough decision whether to pay points or "buy down" the rate of interest on a home loan. Find the answers of the following 5 questions to help sort through some of the confusion:

    1) How long do I plan to own this home?

    The longer you retain the mortgage loan the longer you will have to benefit from the lower rate. If you sell or remortgage a year or two down the road the lower rate will most likely not have generated significant savings.

    2) Can I afford the extra up front expenses?

    Be sure you could cover your down payment, settlement costs, and maintain the required reserves, or cost savings, needed to qualify for your loan before you consider paying points. When buying a whole new home it's also a smart idea to have a moving fund set aside for moving expenditures and buying additional items you may not realize you need until you're in the home.

    3) Who is paying the closing costs?

    If you are moving for work and your boss is paying your settlement costs as part of a relocation package, or the seller of the house you are purchasing has agreed to cover the closing costs, buying down the mortgage rate can be an outstanding way to reap the benefits of the funds at your disposal. In both cases the amount is mostly limited to a percentage of the loan amount, so you will want to make sure that the other essential closing costs are paid for, and then any remaining amount may be able to go towards mortgage points. Verify to make certain that discount points are an allowable use of the relocation assistance or seller paid closing costs.

    Whether or not to pay points generally comes down to running the numbers. Your Orlando mortgage professional can assist you calculate how many months it would take to break even when accounting for the extra up front charges. You also may want to ask a tax professional regarding the tax implications of paying points or additional interest as part of your monthly payment.

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