A digital model is stored and secure data electronically collected and saved on a computer. To complete the model a RE/MAX Best Associate will ask questions and your answers will be stored on a password protected [...]]]> Click this text to return to the RE/MAX Best Associates Website to see All Kansas City properties!

A digital model is stored and secure data electronically collected and saved on a computer. To complete the model a RE/MAX Best Associate will ask questions and your answers will be stored on a password protected secure web based form. 

You will be asked questions such as your price range, the minimum # of bedrooms and baths you require and the geographic boundaries of your search. The online form will save your specific needs such as a minimum number of garages or your need for a fenced yard or a finished basement.   Next your model is “matched” to the central Heartland MLS database for all properties that meet or exceed your specific needs. The list of matches returned from the central database becomes our baseline list. You will receive a copy of the baseline list of properties.

As you see more properties your criteria may change and your digital model will be constantly updated. A match search on your model is run as often as required, weekly, daily or even hourly. The advantage of using a digital model is you always stay current with the market. As new properties reach the market matching your model, you will be notified via email or by another method you prefer.

Building your digital model takes under an hour including time to explain and provide you with a package of valuable information.  If you are serious about buying a home, building your personal digital model is the first step. Please send your request for an appointment to create your personal digital model to tfarrell@remax.net in the subject line please type digital model.

Whether you’re thinking about buying or selling or seeking information, rely on RE/MAX Best Associates 800-391-BEST(2378) X106 or 913-339-0615 to provide accurate up to date information about the marketplace.email tfarrell@remax.net  or  www.kansascityerealestate.com 

By paying an additional amount, toward the principal on your home loan payment each month you will save handsomely. For example, you have a home loan for $150,000, with a loan term of 30 [...]]]> Click this text to return to the RE/MAX Best Associates Website to see All Kansas City properties!

Another way to potentially save thousands of dollars requires you pay for an appraisal. Most mortgage lenders require homeowners, who initially invest less than 20 percent of the purchase price of the home they purchase, to buy private mortgage insurance. The insurance, often called PMI (Private Mortgage Insurance) or MIP, is intended to insulate the lender’s risk.  The lender with 20% down has greater collateral than a lender with five or ten percent down.  From the lender’s point of view their risk is greater therefore they require the borrower to offset the additional risk by paying the private mortgage insurance premium.

PMI insurance payments vary and are paid monthly as part of your mortgage payment, much like you pay your homeowner’s insurance and taxes. The number of homeowners paying for the coverage has swelled in recent years as lenders have
loosened requirements and allowed more mortgages with 5 or 10 percent down payments. You may be eligible to cancel the insurance when your mortgage principal (the amount you owe) equals eighty percent or less of your home’s
value.   Lenders use the phrase loan to value or LTV. You must take the initiative.  If you believe you qualify, proof of value must be presented to your lender.  The first step is to call your lender.  Many lenders have approved appraisers and may require you use an appraiser on their approved list to document the value of your property. If you purchased your home with less than 20 percent down, you are probably paying PMI.  Some mortgage lenders must automatically cancel your PMI insurance. Before you pay for an appraisal you may wish to read this informative article http://www.frbsf.org/publications/consumer/pmi.html Any one of the associates at RE/MAX Best will complete a computer market appraisal for you at no cost. 

Whether you’re thinking about buying or selling or seeking information, rely on RE/MAX Best Associates 800-391-BEST(2378) or 913-345-BEST(2378) to provide accurate up to date information about the marketplace. info@kansascityehomes.com www.kansascityehomes.com

Happy Valentine’s Day!!  When buying real property you must demand fee simple marketable title. Fee simple title is clear title, which is "clear" of any liens.

The question is what is clear title and how do you get it. If the [...]]]> Click this
text to return to the RE/MAX Best Associates Website to see All KC properties!

Happy Valentine’s Day!!  When buying real property you must demand
fee simple marketable title. Fee simple title is clear title, which is
"clear" of any liens.

The question is what is clear title and how
do you get it. If the seller cannot give you fee simple title DO NOT
BUY THE HOUSE.

Fee simple title is a legal description for
the highest and best title available for real property. Only when title is held
in fee simple can a clear title be granted. Although buyers accept less than
fee simple it is NOT recommended.

A title company or an attorney often
discovers title “clouds” or defects in preliminary title searches.  Clouds can include unpaid liens or judgments,
encroachments, easements and other situations that need clarification. Some
clouds may pass with the title.

Title companies search the public record to
determine that the chain of title has not been broken or violated. The public
record includes deed books, estates, recorded plats and judgment records. A
visit to the registrar of deeds office is both enlightening and educational.

If the chain of title can be perfected,
title insurance may be issued to protect you from any claim against the
property in the future. Title insurance is your guarantee of clear title. If a
mortgage is involved in your transaction, the lender will require a title
search and a lender’s policy will be issued. If you buy real estate demand fee
simple title and title insurance no exceptions. IT MUST BE PERFECT!

Whether you’re
thinking about buying or selling or seeking information, rely on RE/MAX Best
Associates 800-391-BEST(2378) or 913-345-BEST(2378) to provide accurate up to
date information about the marketplace today.

Visited a Sam’s Club or one of the huge "mega stores lately? The array of products is mind-boggling. The purchase of a home can present the same kind of difficulty unless you narrow your search.

Consider some of [...]]]>  Click this text to return to the RE/MAX Best Associates
Website to see All Kansas City properties!

Visited a Sam’s Club or one of the huge
"mega stores lately? The array of products is mind-boggling. The purchase of
a home can present the same kind of difficulty unless you narrow your search.

Consider some of your choices. Prices may
range from $20,000 to $20,000,000. There is the number of bedrooms and baths to
consider. There is the style to consider and the location. You need to decide
how large a home you need. Your list of options is endless.

After you’ve decided to make a home
purchase, gather the family members who will be living in the property. Each
person should make a list of things they’d like to have in the new residence.
Each member of the family should then prioritize these lists.

The list should and will contain many ideas,
some of which may surprise you. Common interests will be easily recognized and
a vision of your new home will begin to develop. You can now eliminate from
your lists all low priority items. Your objective should be to include all of
the most important "can’t live without" elements.

Call your RE/MAX Best Associate with your
final list and discuss "trade-offs". It is extremely rare to find a
property that includes all of elements of a final list. Once your specific
needs are determines, you and your RE/MAX Best Associate can preview properties
to additionally narrow your search and save time.

Whether you’re thinking about buying or
selling or seeking information, rely on RE/MAX Best Associates
800-391-BEST(2378) or 913-345-BEST(2378) to provide accurate up to date
information about the marketplace. info@kansascityehomes.com www.kansascityehomes.com

By reading this article you are a member of a growing number of digital gatherers. All of the Real Estate Matters articles are responses to questions asked by you. This article is in response to a question regarding zoning. [...]]]>  Click this text to return to the RE/MAX Best Associates
Website to see All Kansas City properties!

By reading this article you are a member of
a growing number of digital gatherers. All of the Real Estate Matters articles
are responses to questions asked by you. This article is in response to a
question regarding zoning.

After a recent holiday in Mexico it is clear
how fortunate we are in these United States. All floors throughout the 200-room hotel including the guest rooms are
solid marble and the hotel is first class in every way.

Walking several blocks in either direction
from the hotel one can find an auto wrecking and salvage yard, a restaurant
with dirt floors, numerous started but uncompleted structures and many vacant
lots that claim nothing more than rubbish and tall weeds. In town a gas station
is next to an open-air fresh food market and a bank is located next to the
local adult bar. The elementary school is located on the main road where speed
limits were nonexistent.

When considering the purchase of real
property, any vacant property near your choice should be investigated thoroughly.
After determining the legal description of the property, a visit to the planning
office in the city where the property is located is both prudent and wise.

Ask lots of questions. When it comes to
making maybe the largest single purchase of your life, THERE ARE NO DUMB
QUESTIONS. Ask to see a copy of the city’s master plan. Most areas in the U.S.
have a depository where all the property records are kept. In many areas these
records are kept in the county seat where the property is located. It is important
to know how the property is taxed. Specifically ask about the mill levy, which
is how municipalities calculate property taxes. Then, ask more questions.

A comparison of services like fire
department response time and police availability may be another consideration.
If your questions cannot be answered in the heat of negotiating, make your
offer to purchase subject to receiving the answers you require. Homes
associations govern many areas. Ask for a copy of the homes association deed
restrictions and declaration

Whether you’re thinking
about buying or selling or seeking information, rely on RE/MAX Best Associates
800-391-BEST(2378) or 913-345-BEST(2378) to provide accurate up to date
information about the marketplace. info@kansascityehomes.com www.kansascityehomes.com

According to Stacey L. Bradford of SmartMoney.com …

REAL-ESTATE prices may be cooling, but first-time homebuyers still face the issue of affordability.

Mortgage lenders have [...]]]> Click this text to return to the RE/MAX Best Associates Website to see All KC properties!

According to Stacey L. Bradford of SmartMoney.com …

REAL-ESTATE prices may be cooling, but first-time homebuyers still face the issue of affordability.

Mortgage lenders have responded by devising some truly novel loan structures, mostly designed to cut borrowers’ payments in the early years. But while many of these products succeed in making pricey homes available to people who otherwise couldn’t afford them, they can also be fraught with risk.

Here’s a rundown of some of the latest and most exotic mortgage products out there, along with a look at the types of borrowers who might want to consider them.

1. The 40-Year Mortgage
These products are similar to 30-year fixed-rate mortgages, except that borrowers stretch the payments out for an extra 10 years. Lenders, however, charge a slightly higher interest rate, up to half a percentage point, according to Bankrate.com’s Greg McBride.

Pros: A 40-year mortgage offers lower monthly payments than a 30-year loan, while locking in today’s attractive interest rate. On a $300,000 mortgage at today’s prevailing interest rates (6.5% for a 30-year and 6.75% for a 40-year), a home buyer could save nearly $95 each month.

Cons: By extending the length of the mortgage, the borrower increases the amount of interest paid over the life of the loan. On that same $300,000 mortgage, a homebuyer would spend an additional $186,200 using a 40-year mortgage.

Good For: Experts recommend this product only for first-time home buyers who don’t plan on staying in the house for more than a few years, and who can’t afford the higher monthly payment associated with a 30-year mortgage.

2. The Portable Mortgage
In 2003, E*Trade launched a program called Mortgage on the Move. It allows home buyers to lock in today’s low interest rates and take the loan with them should they move into a new house a few years down the line. A second mortgage can be used if the buyer needs to borrow more money for the next home.

Pros: With current mortgage rates low — and by most estimates likely to rise — locking in today’s rate for the next 30 years is attractive.

Cons: Interest rates for portable and second mortgages come at slightly higher interest rates than do standard loans. A portable mortgage is priced at 3/8 to 1/2 a percentage point higher, and a second mortgage is often 3/4 of a percentage point higher than a typical 30-year fixed-rate product, says Robert Snow, vice president of retail lending at E*Trade Bank.

Good For: People who know they will be moving in a reasonable amount of time and want to lock in today’s historically low rates.

3. The Interest-Only Mortgage
With an interest-only loan, lenders allow borrowers to pay just the interest portion of their mortgage during the first, say, 10 years of their commitment. After that, the loan essentially becomes a new mortgage with new interest and principal payments stretched out over just 20 years.

Pros: In addition to smaller monthly payments during the interest-only repayment period, all of the money a borrower puts toward the mortgage during this time period is tax deductible.

Cons: When home prices stagnate, homeowners will not build up equity during the interest-only years. Also, monthly payments jump significantly once the principal-payment period begins. Most of these loans also carry variable interest rates, further increasing a borrower’s risk for higher monthly obligations.

Good For: Young lawyers, doctors, MBAs and others who know (and remember, there are no guarantees in life) that their incomes will rise significantly over the next few years. Interest-only loans can also be a good option for professionals who receive bonus payments as part of their compensation. This product allows them to make minimum payments during most of the year when cash is tight and then put down several thousand dollars toward principal when they get their bonus checks.

4. The Negative Amortization Mortgage
This interest-only product allows buyers to pay less than the full amount of interest necessary to cover the costs of the mortgage. The difference between a full interest payment and the amount actually paid each month is added to the balance of the loan.

Pro: An even smaller monthly payment than an interest-only mortgage, during the first few years of the loan.

Con: This is the riskiest mortgage lenders offer. When housing prices stagnate or fall, buyers find themselves "upside down" or in "negative equity," meaning they owe money to the lender if they sold their homes.

Good For: Sophisticated borrowers with large cash reserves who want the flexibility of lower payments during certain parts of the year but plan to pay off their loans in large chunks during other parts the year.

5. The Pay Option ARM Mortgage
This is a cross between a hybrid ARM, which offers a lower fixed rate during the first five or seven years and then adjusts annually, and a negative amortization loan. Each month the lender sends the borrower a payment coupon that calculates four possible payment options: a negative amortization, an interest-only, a 30-year amortized and 20-year amortized. The homeowner then decides how much he wants to pay. (Some mortgages offer only an interest-only and a 30-year fixed option.)

Pro: The bank does all the thinking. Each month it recalculates the balance and tells the borrower how much he or she would owe under different scenarios, giving the homeowner significant flexibility.

Con: Borrowers could end up owing more money on their mortgage than they can fetch for their homes.

Good For: People who like options and have large cash reserves for when the mortgage payments increase during the later portion of the loan. Like interest-only loans, Flex-ARMs are good tools for those who derive much of their income from bonuses, says Derek van Dam, vice president of sales for online lender Amerisave.

6. The Piggy-Back Mortgage
This product is actually two mortgages. The first covers 80% of the property’s value. The second, which comes at a slightly higher rate, covers the remaining balance.

Pro: In most cases, homeowners save money by taking out a piggy-back loan (also known as a combo loan) since it allows them to avoid paying costly private mortgage insurance when buying a home with less than a 20% down payment. Plus, the money that would have gone toward PMI is now tax deductible, since it’s going toward an interest payment.

Con: As we mentioned, borrowers pay a higher interest rate on the second mortgage. And rates can vary greatly depending on credit score. Also, since the borrower has little equity in the home, should it fall in value when it’s time to sell, the borrower would need to pay the difference in cash, warns Mark Prather, president of Mark 1 Mortgage, a Cerritos, Calif.-based mortgage lender.

Good For: Young professionals with relatively high salaries but little savings.

7. 103s and 107s
Who needs a down payment? Nowadays, people can even borrow 3% to 7% more than the house is worth.

Pro: There’s no upfront cost to move into a home. The buyer can borrow the money needed for closing costs and have some left over for home repairs. Closing costs are typically 1% to 3% of a home’s total value.

Con: Interest rates for these products tend to be high. Pete Bonniker, a senior vice president at E-Loan, says borrowers would be better off in a combo loan. And like piggy-back loans, borrowers run the risk of negative equity if the house loses value.

Good For: People with large cash reserves who prefer to invest in, say, the stock market rather than tying up their assets in real estate.

8. Home Equity Line of Credit
They aren’t only for existing homeowners anymore. Known in the industry as HELOCs, these products let buyers finance original home purchases using a credit line rather than a traditional mortgage. HELOCs are variable-rate loans tied to the prime rate, which now sits at 4%. If a HELOC is used as a first-position loan, all of the interest is tax deductible, says Keith Gumbinger of HSH Associates, a mortgage-information firm based in Pompton Plains, N.J. Here’s how it works: The buyer makes a down payment, and the credit line covers the rest. HELOCs typically cover up to 90% of the appraised value of the home. Lenders also offer up to 100%, at significantly higher interest rates.

Pro: Borrowers can also take out additional funds against the equity in their homes without hassle or additional cost.

Con: Most HELOCs are structured for just 10 or 20 years, rather than the customary 30. And since the interest rate is variable, payments can be volatile, and can rise substantially higher alongside the prime rate. In this environment, HELOCs, which are averaging well over 8%, aren’t all that attractive. Still, it’s a lot better than what you’d get with the typical credit card.

Good For: People who need access to their money on a regular basis.

9. Loan Modification Mortgage
With this loan, the borrower can subsequently change the terms just by making a phone call, with a capped closing cost each time of just $1,000 for every million dollars borrowed. Moreover, the mortgage’s duration isn’t changed each time the rate is modified.

Pro: Little paperwork is necessary, and closing costs are kept to a bare minimum.

Con: Some lenders offer the added flexibility with a price tag of roughly 3/8th of a percentage point on every type of loan.

Good For: People who like to follow interest rates. But borrowers should make sure to factor in the $1,000 fee every time they consider modifying their loan. Ron Chicaferro, executive vice president of Thornburg, says most of his customers have financial planners who manage their mortgages for them.

10. Short-Term ARMs
These ARMs offer fixed-rate periods and the interest rate floats with the index they’re tied to. But since the fixed portion is for a very limited time — say, six months or one year — lenders offer very competitive rates.

Pro: Very low interest rates during the fixed portion of the loan. The initial monthly payments are relatively small.

Con: Six months or a year can pass by in the blink of an eye — and rates can change dramatically during that span. Back in July 2003, for example, Charles Schwab offered a six-month ARM with an interest rate of 3.0%. Today, that same product sits at 4.99%. On a $250,000 loan, that would mean an increase of $258, says Richard Musci, chief marketing officer for Charles Schwab Bank.

Good For: People who plan on moving in a very short period of time.

Whether you’re thinking about buying or selling or seeking information, rely on RE/MAX Best Associates 800-391-BEST(2378) or 913-345-BEST(2378) to provide accurate up to date information about the marketplace. info@kansascityehomes.com www.kansascityehomes.com

Click this text to return to the RE/MAX Best Associates Website to see All KC properties!

 According to bankrate.com the benchmark 30-year fixed rate fell to 6.08% that is the rate’s lowest level since October of 2005. Soooooooo, if you didn’t take advantage of your opportunity then you have another chance. [...]]]>  

Click this text to return to the RE/MAX Best Associates
Website to see All KC properties!

 
According to bankrate.com the benchmark
30-year fixed rate fell to 6.08% that is the rate’s lowest level since October
of 2005. Soooooooo, if you didn’t take advantage of your opportunity then you
have another chance.

Two years ago shortly after "hitting bottom," interest rates shot up
to over 9%. The difference of two percentage points on rates is staggering over
the life of a loan. A $100,000 loan at 9% for thirty years requires a payment
805.00 but drop the rate to 7% and the payment is $666.00. The difference per
month is $139.00 and per year $1,668.00 and over the life of a thirty year loan
$50,040.00!!

The secondary benefit of taking advantage of
today’s low rates is you can qualify to buy more houses. For example, lets say
that you’ve qualified for a $100,000 loan at 9% with payments of $805. per
month. By placing 20% down you can buy a property valued at approximately
$125,000. If we assume the same down payment with the loan rate at 7%, you now
qualify for a loan of $121,000. and a property valued at approximately
$151,000!  

You may wonder if rates are going lower.
There are no guarantees in the money market and the risk of waiting is probably
not worth it. Rates may just as likely go up. Some lenders may allow you to
"lock" a rate based on a conditional loan approval on a specific
mortgage amount. If you have the need to buy real property, NOW IS THE TIME.
Take the Nike approach and "just do it".

Whether
you’re thinking about buying or selling or seeking information, rely on RE/MAX
Best Associates 800-391-BEST(2378) or 913-345-BEST(2378) to provide accurate up
to date information about the marketplace. info@kansascityehomes.com www.kansascityehomes.com

Click this text to return to the RE/MAX Best Associates Website to see All KC properties!

 If you plan to sell your present property and purchase another, one of the best things you can do is to qualify for a mortgage BEFORE making an offer to purchase. Many lenders will provide a letter stating you [...]]]>

Click this text to return to the RE/MAX Best Associates
Website to see All KC properties!

 
If you plan to sell your present property
and purchase another, one of the best things you can do is to qualify for a
mortgage BEFORE making an offer to purchase. Many lenders will provide a letter
stating you are approved for a mortgage not to exceed a certain payment subject
to the property appraisal and certain verifications.

Lender letter in hand, a powerful clause may
be added to your offer to purchase agreement which states you are approved for
a mortgage. The seller recognizes you took the necessary steps too assure
yourself and the seller you are a ready, willing and able buyer.

The approval process may be accomplished by
phone or in person and generally requires the receipt of an "in file"
credit report. Your full credit report must be ordered and generally costs less
than one hundred dollars. Someone must order the credit report, so why not get
it out of the way. It is amazing how often a credit problem is discovered that
turns out to be in error. It is far better to solve a credit problem early in
the approval process then to discover it while you prepare to move. Often all
that is required is a letter of explanation to correct many credit history
inaccuracies.

In some parts of the country there is a
shortage of properties on the market. Whenever a supply of a product is less
than the demand for the product, the available products demand higher
prices.  Said another way, when there are more buyers than products to
buy, sellers tend to get their asking prices.

Many times there are multiple offers on the
same property. All offers are presented together and the seller decides which
to pursue. Guess who has the greatest chance of consideration, the approved
buyer with lender letter in hand or the buyer who thinks they can qualify. Do
yourself a favor, before you buy, go through the approval process. Call a
RE/MAX Best Associate to suggest a lender to assist you.

Whether
you’re thinking about buying or selling or seeking information, rely on RE/MAX
Best Associates 800-391-BEST(2378) or 913-345-BEST(2378) to provide accurate up
to date information about the marketplace. info@kansascityehomes.com www.kansascityehomes.com

Did you know when you enter an open house, whether it is a pre-owned property or a model home in a new home area, and you register by signing a quest book or revealing your name, you may become a [...]]]> Click this text to return to the RE/MAX Best Associates Website to see All KC properties!

Did you know when you enter an open house, whether it is a pre-owned property or a model home in a new home area, and you register by signing a quest book or revealing your name, you may become a protected client of the registering agent and MAY NOT be able to seek your own advocate. Frightening isn’t it.

Open houses are held by SELLER’S agents. A seller’s agent LEGALLY represents the seller. In the case of new homes the agent or agents hosting the open houses may represent the developer as well as the builder of the model where the open house is held. If you register or reveal your name you may have effectively waived your right to representation to purchase any home in the subject area whether it is built or not. Most new home areas have a sign posted in the entrance that says, "We represent the SELLER."

How do you protect yourself? First and foremost seek a buyer’s advocate to represent your interests and not the sellers. In most cases, the hiring of a buyers agent does NOT cost you anything and in fact may save you thousands of dollars.

Every property listed with a realtor has a brokerage fee or commission included in the price. What many buyers fail to recognize is if you enter a property that is open and seek no representation and ultimately purchase that property, the entire brokerage fee is paid to the agent that represents the SELLER. If you must attend open houses, the best way to protect yourself is to inform the agent hosting the open house  you have a buyer’s advocate. This is often a relief to the host agent in that the agent no longer is liable for the discovery process of the buyer’s agent.

What about for sale by owners (unrepresented sellers) and builders?" For sale by owners have two objectives. The first one is to sell the property and the second is to save the commission. For sale by owners are not obligated to abide by any code of ethics nor must they disclose anything detrimental to their position. Would you rather buy from a for sale by owner with no representation and risk paying too much for the property or have representation and have the seller pay your representative? The answer is clear.

In Kansas City most builders build in controlled subdivisions. The areas are controlled in that all lots within a given area are controlled by a developer who has a contractual agreement with a marketing agent (usually a real estate firm). An area is also controlled in that the developer restricts who may build in the area. Ordinarily a developer will not sell a building lot to an individual unless that individual is an approved builder. Most new home marketing agreements include language which states that no matter who buys any lot within the area, the marketing firm will be paid a commission on the lot price plus the price of the home constructed on the lot. In other words, you may go directly to a builder yet there is still a full commission included in the purchase price of your new home and the lot. By working directly with a for sale by owner or a builder you pay for representation which you DO NOT receive.

Whether you’re thinking about buying or selling or seeking information,
rely on RE/MAX Best Associates 800-391-BEST(2378) or 913-345-BEST(2378)
to provide accurate up to date information about the marketplace. info@kansascityehomes.com realestate-matters.com

Determining what kind of mortgage to apply for is no longer a simple decision. Just a few of your considerations include points or other fees, term, to lock or to float and time frame and qualification criteria.

It is [...]]]> Click this text to return to the RE/MAX
Best Associates Website to see All KC properties!

Determining what kind of mortgage to apply for is no longer a
simple decision. Just a few of your considerations include points or other
fees, term, to lock or to float and time frame and qualification criteria.

It is essential today to work with a competent mortgage
professional.

A point is a fee lenders charge, which is equal to one percent of
the mortgage amount. One point on a $100,000 mortgage equals one thousand
dollars in fees. Some mortgages require no points and are originated with a
higher interest rate than mortgages with points included.

From a lenders point of view a loan with points paid by the
borrower may be offered at a lower interest rate because the lender receives a
return on their investment on the first day of the loan. The borrower pays the
point(s) as part of the closing costs associated in acquiring the mortgage.
Said another way, a loan with a point or points included increases the yield on
the loan for the lender therefore the lender may charge a lower interest rate.

In order to determine which plan is better for you, we need to
consider the following items.

Do you have the necessary income to
qualify for a higher payment with a no point loan?

Do you have the additional cash, assets
or equity if refinancing to pay points to achieve a lower mortgage payment?

Is the seller or another entity (like a
relocation company) paying all or part of your closing costs?

If you can qualify for the higher payment and or have the
necessary assets to fund the payment of points, the decision to pay points
depends on how long you will have the mortgage. The
benefit of lower payments will become equal or surpass the cost of points over
time. If you plan to have your mortgage less than three years you are unlikely
to recapture the cost of any points paid. If you plan to have your mortgage
four to six years you are likely to break even. After six years the benefits of
paying points will outweigh the cost of points. Please see the illustration
below.

$100,000 mortgage – 30yr. Fixed rate No Points versus Points

Option 1
7.00%=$583.33-no points

Option 2
6.50%=$541.67-2.5 points

Differences

Option 1 = $41.66/mo more payment

Option 2 = $2,500 more fees

Additional fees ($2500.) divided by $41.66 monthly savings=60
months break even.

The analysis above does not consider the potential deductibility
of points or the potential tax deductibility of higher mortgage payments or the
present cost of money or the potential future value of the same dollars. Future
dollars are potentially worth less because of inflation.

The point is base your decision on whether or not to pay points on
your personal situation and consider all the pertinent points
discussed here.

Whether
you’re thinking about buying or selling or seeking information, rely on RE/MAX
Best Associates 800-391-BEST(2378) or 913-345-BEST(2378) to provide accurate up
to date information about the marketplace.

info@kansascityehomes.com realestate-matters.com