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James Patton, CRS
Newsletter Of Coco Isle Realty
Prepaying a Little Now
Can Save A Lot Later! Most homebuyers borrow money to pay the seller the difference between their down payment and the purchase price. The lender creates terms of a promissory note - a mortgage -for the amount borrowed and establishes an interest rate on the amount of the loan to be paid.
Few realize that the interest payments add about two-and-a-half times the original loan amount over the term of the mortgage. When compared to renting over the same 30-year term and considering the very substantial interest deduction, this number remains reasonable---but there is a simple way to make it much less.
In most cases, you can save money by prepaying an amount that is greater than what you have to pay each month. Paying an extra $25 per month of principal can save you $27,814 on a 30-year, $100,000 loan at 8.7% interest. A few suggestions to consider:
I prepare an amortization schedule for you at closing as part of the Successful Buyer Program and Successful Seller Plan. You can then pay next month's principal this month, and cut the loan term in half if you do this every month! Think of how much you can save! Ask your me about details of prepayment before you embark on Close & Fly.
----------------------------------------------- Can A Few Points Of InterestMake Much Difference?
When we sit down and review an amortization payment chart at the beginning of our journey to find you a home, I will compare for you monthly payments required to retire the principal and pay the interest. I think you would see a big difference in a few percentage points. Here's an example:
Monthly payment for a $100,000, 30-year loan at 8% requires a monthly payment of $734. For the same loan at 10% you pay $878. The difference is $144 per month. Bear in mind, however, that the interest portion of the increased amount is tax deductible.
----------------------------------------------- "Questions I Am Sometimes Asked" We want to sell our house and use the profit to purchase a condominium on Oahu. Can we get an estimate of what our profit will be? Should we look for the condominium before we sell our home? We have heard about leasehold and fee simple land on Oahu; which should we buy? --Mr. & Mrs. Rick Sylva. Answer: As a Certified Residential Specialist serving as your Realtor and Broker, I would initially calculate your current home equity - the difference between the value of your property and the balance of your mortgage. This is part of a comprehensive market analysis I use to initially estimate your "profit" before the sale of your property. Pricing is an important part of selling, and influences how much is actually obtained. As a Certified Residential Specialist serving as your Realtor and Broker, I would initially calculate your current home equity - the difference between the value of your property and the balance of your mortgage. This is part of a comprehensive market analysis I use to initially estimate your "profit" before the sale of your property. Pricing is an important part of selling, and influences how much is actually obtained.There are many costs and conditions associated with the sale of a property -- and it helps you that I know the Honolulu real estate market. With a financial analysis we can discuss the plan of buying a different property. You would have a good idea of what you could use for a down payment. In addition, we could determine a reasonable mortgage payment based on the monthly family income, the ideas of bridge loan, rent back, closing, early occupancy, appraisal value, walk through, short sale, and many more ideas in the buying process as we search for the new home. The selling/buying plan requires a kind of "juggling act." Sell first, and you are certain about your equity from the sale to put into your Hawaii home.
Regarding the distinction between Leasehold and Fee Simple land on Oahu, please click the blue links in the question above for more detailed information. Almost any Hawaii real estate question you have may answered through this site by clicking on any InstantAgent icon. At the Referral Page, or by our Panel Of Experts. Please feel free to contact me directly with any real estate related matter at james@cocoisle.com.-----------------------------------------------
Guidelines for First Time Home BuyersYou or a friend or relative may want to purchase a house for the first time. The following are some basic tips to better prepare the first time homebuyer. If you would like to discuss details of the following points, please call me or e-mail me through our Hawaii Real Estate Online website, or see Properties, Programs, And Approaches for a details of what HREO and Coco Isle Realty offer."
In helping you buy your first home or investment property, remember:- It saves a great amount of time to have mortgage loan pre-qualification assistance to help determine accurately how much you can afford to focus on the right properties early.
- Generally, a family can afford a mortgage loan equal to about twice the amount of their annual household income.
- Most home loans require a minimum down payment of at least 5-10% of the price- and most often 20% to avoid mortgage insurance.
- The mortgage payment consists of what is called PITI - principal, interest, taxes, and insurance. The interest portion is deductible.
- Most lenders require that the monthly payment be no more than 25% to 28% of a borrower’s gross monthly income, although total debt can go as high as 40% (see Ratios). Remember that lenders tend to be conservative. They do not want to loan you more than you can afford.
- This idea coupled with the low interest rate, the interest deduction, and current low prices are a reason why people try to buy the most home they can.
- When comparing the monthly costs of owning versus renting, take into consideration the mortgage interest and property tax deductions from the federal income tax.
- You should plan for Closing Costs related to the final phase of purchasing a home.
- You should get loan pre-approval before you find the property.
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Location! Location! Location!
People who are house hunting often find two homes that are very similar, except for location. You find a house in a more desirable location and it is several thousand dollars higher. Should you pay that much more just for the better location? Some experts say there are three rules of real estate: location, location, and location. Successfully selling a home depends on three factors - location, price, and condition of the property. The location is the one variable you cannot control once you own the home. We will discuss this in our consultation.
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