Archive for the 'Julie’s Mortgage Tips' Category
New Orleans Condos, Using State Bond Money to buy your condo, good deal?
March 5th, 2008 categories: Julie's Mortgage Tips
Like clock work, the state of Louisiana and various Parishes will have Bond Money for people to buy not just homes but condos as well. The State Bond money will be out on a regular basis and have a few new wrinkles and rates on each issue. The last issue was just completed. There has not been any first time home buyer limitations and the income cutoff has been around 62k for a family of two. Jefferson Parish will generally have an issue, Orleans Parish is much more infrequent and no one knows it exists when it does come out. The interest rates are fixed for the duration of that Bond Issue.
The value is in that the Bond Authority gives you a credit for about 4% which can go for closing cost and down-payment. You have to qualify for a regular loan and then fit into the program. The rates are fixed 30 year rates that are very competitive and will not change during that issue. If you buy a condo for 160k then you will get a credit of $6400 to help you with closing. If you do not want the assisted part or the credit you will get a much lower rate. You have to have a real estate contract before signing up for it.
You have to stay tuned as this is a great deal for many people who fall under the income limit. You can use this with a conventional loan or an FHA loan. I had 10-12 clients that were able to take advantage of these issues. Julie Baudier will have all the info as each Bond Issue is announced. Check out my site to look at past Bond Issues. If You are a teacher it could be even better on the interest rate plus the 4% credit. Checking it out ahead of time gives you more options and a change to save money.
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New Orleans Condos, Ten Years is a long time! Time is on your side?
March 1st, 2008 categories: Condo Knowledge, Julie's Mortgage Tips
Knowing how long you plan to stay in your condo can have a big impact on your monthly note. Ten years is a long time, think about what you were doing ten years ago? The rate for 10 year fixed rate loan can be as much as 3/4 point lower as that of a 30 year fixed rate Loan. Both loans are fixed and are paid off like they are a 30 year term. Loans are figured with a risk factor and a 30 year loan is riskier than that of a 10 year loan.
Many lenders may not mention the variety of loan choices as they would rather lend you many at 6.5% rather than 5.75%. Most people stay in a home for something like 8.5 years as an average. If you look at condo the time is often less due to a number of factors that deals with the lifestyles of the people who buy. People get married, are transferred, are promoted, opt for a home, opt for another condo among a variety of reasons.
What does this mean for you? You can get a loan for 200k for 10 years at 5.75% which costs you $1168 for principal and interest. You can get a 30 year loan at 6.5% for $1266 per month. The difference is $98 per month. If you stay in your condo for five years you save almost $6000 and you could have saved that or invested it. The gap between the loan does change so the gap may be smaller or larger depending upon the interest rate markets. You should always save as time is money.
If you know your time is going to be shorter then this is definitely something to consider. How do you come out ahead? Remember rates have been moving around a lot lately so its always a must to check and ask about the fees. Eric
10/1 ARM
” The interest rate for this loan will stay the same for the first 10 years. The term for this loan is 30 years. At the end of the first 10 years this loan will automatically adjust to an adjustable rate mortgage. Usually the adjustable rate mortgage is a one-year Treasury arm. The interest rate for this loan will adjust once per year. The first adjustment may be larger than the remaining adjustments. You should check to see if this loan has a cap on the maximum it would adjust at the first adjustment. The loan should also have a cap for the maximum percentage that it can adjust each year after the first adjustment. Usually with a treasury arm loan the cap is 2% every year. You also need to check that this loan has a cap on the maximum percentage it can adjust during the term of the entire loan. Be sure to calculate your payment based on the total maximum payment your loan could ever reach. That way you will know if you can make that payment without any financial difficulty.”
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Looking to the Future, Loan from the past?
February 22nd, 2008 categories: Julie's Mortgage Tips
FHA loans will be used more and more in the following months to come. Conventional loans keep tightening their guidelines and are requiring larger down payments.
What is an FHA loan?
FHA stands for Federal Housing Authority. It is a government loan guaranteed 100% against default by the Federal Housing Authority.
What are the advantages of FHA?
- Low down payments
- More liberal on credit problems
- Low fee’s
- No income limits
Sales Price Limits:
- single family $218,500
- double $256,248
- tri-Plex $309,744
- four-Plex $384,936
Congress is presently trying to pass a bill that will raise the sales prices on FHA loan.
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New Orleans Condos, To Buy or Rent? Have you thought about it?
February 16th, 2008 categories: Condo Knowledge, Julie's Mortgage Tips
There are several things to consider when you are thinking about buying. The first is how long do you plan on being in New Orleans? If your answer is more than 18 months then buying may be the best way to go. Paying rent of $1200 per month is expensive and over 48 months its $57,600 and you have nothing to show for it. You will have a hard time finding a place that would sell for 200k that you could rent for $1200, but lets use the 200k price with zero down as an example.
1. Borrowing 200k at 6% your note will be $1200 per month for principle and interest. The interest each month is $1000 and the decrease in principal each month is $200. The equity increases monthly as your principal decreases each month. At the end of four years you should have over $10,000 in equity. $1o,ooo of equity for you. It cost you less than $48,000 in interest. The interest portion gets smaller each month.
2. Your condo fees should run on the average between 200 and 300 per month. You will not see this money again as it is insurance, maintenance and services. This is gone but it protects your investment. Your taxes will run about $1700 per year. The combination of taxes and condo fees will run between $400 and $450 per month for each. This is an expense of $4800-$5400 per year or about $20,000 over 4 years as an expense.
3. You get to deduct interest and taxes from your federal and state income tax. If you pay 25%-30% in taxes the saving are between $300 and $350 per month or on a yearly basis between $3600 and $4320. This is your saving forever. The higher brackets will save much more. Saving about $4000 on your taxes is huge every year or $16,000 over 4 years.
4. Appreciation, The increase on your units value. Picking the right unit in this market can still get you some appreciation. At 2% per year appreciation of the sales price that is $4000 per year. You get this each year and its yours to keep after 2 years, you pay no taxes on the gains if you have lived here 24 months. That is huge after 4 years. $16,000 for you. This is a conservative figure based on past New Orleans History.
Rent -$57,600 Buy Interest -$48,000
Tax Breaks + $16,000
Taxes/ fees - $20,000
Appreciation +$16,000
Equity +10,000
Owning your own place is priceless, its yours. Be your own landlord.
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New Orleans Mortgages, What is PMI?
February 14th, 2008 categories: Julie's Mortgage Tips
What is PMI?When can PMI be removed?
PMI is tax deductible.
PMI stands for Private Mortgage Insurance. PMI is required when the borrower does not have 20% down payment towards the purchase of a property. PMI is insurance against default. If the borrower defaults on the loan the Private Mortgage Insurance Company pays a portion of the loss.
The lender may allow you to remove PMI after two years of paying successfully on your loan. The lender usually will order an appraisal to make sure that your loan is 80% loan to value. After the appraisal is complete the lender can then remove the PMI.
PMI is tax deductible for borrowers. MI is fully deductible for tax payers earning up to $100,000 a year and partially deductible for those with incomes between $100,000 and $109,000.
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New Orleans Interest Rates, Julie’s Weekly Update, Feb. 07, 2008
February 7th, 2008 categories: Julie's Mortgage Tips
Baudier, Grace & Kinler, Standard Mortgage - 504-583-1793
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New Orleans Condos, Building equity in your Condo
February 6th, 2008 categories: Condo Knowledge, Julie's Mortgage Tips
Whether you buy a condo in the New Orleans Warehouse District or in Metairie and if you are getting a loan you will begin to pay off that loan the first month that you are the owner. One thing most people forget is that they building equity as they pay down the loan which is the principal. Borrowing 200k at 6%, your note without taxes is $1200. You begin by paying about $200 towards your principal and $1000 on interest. At the end of year one your equity is $2400. You still owe the bank $197,600 and its getting lower in year two. In year two your payments contribute about $215 monthly towards the principal of your loan. Your principal decreases monthly by a larger and larger amount.
So at the end of two years you have about $4980 in equity. This is your equity that builds over time. You can also pay extra towards your principal if you want to lower it even more. I will do another blog on the tax benefits of owning. This is one of the benefits of owning your New Orleans Condo. In four years your equity easily adds up to more than $10,000. People always forget this factor but now you know.
Aquarium of the Americas in the New Orleans Warehouse District
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