To Pay or Not to Pay

Posted on July 10, 2008 
Filed Under Financing, Real Estate | 1 Comment

Numerous closing costs come with any mortgage. There’s a fee for an appraisal and a fee for a credit report… and the lender has its fees, too. And don’t forget about the attorney fee, title insurance and escrow charges. Closing costs can vary from state to state and province to province, but you really don’t have much choice of whether you want a survey or if title insurance is right for you. There will be a variety of services performed and records searched by different companies, and none of these come free of charge.

But there is one closing cost that you can control: discount points or, more simply, points.

A discount point reduces the interest rate on your mortgage. One point is equal to 1 percent of your loan amount, so on a $200,000 loan one point equals $2,000.

Why do some lenders charge points? In reality, all lenders pretty much have the same rates; it’s just that sometimes a lender will advertise a rate with a point or a rate without a point. But the decision to pay a point is yours alone.

A point will typically reduce your interest rate by a quarter of a percent on a 30-year mortgage. If your lender offers a 6.5 percent rate with no points, then you may also get 6.25 percent with one point. So how do you decide?

It’s simple. Just take the difference in monthly savings gained with the lower rate and divide that into the point. The result equals how many months it will take to “recover” the amount you paid in points. Let’s look at an example.

A 30-year fixed-rate mortgage of $200,000 at a 6.5 percent interest rate would mean a monthly principal and interest payment of $1,264.14. By paying an additional $2,000 in the form of a point, your rate would drop to 6.25 percent and the resulting payment would drop to $1,231.43; saving you $32.71 each month. When you divide that $32.71 monthly savings into $2,000 you get 61.14, or about 61 months. Your recovery period is slightly over five years. That’s a little long in my opinion and I’ve never been a big fan of paying points. Instead, I’d encourage you to take that same amount and pay down your principal.

Remember: The quarter percent difference in interest rates when paying a point is an imprecise, general mortgage rule of thumb. Whichever rate you get, be sure to divide the savings into the points paid to see how long it will take to recoup the difference.

David Reed(courtesy of David Reed of CD Reed Mortgage Bankers)

 

See what’s new in Winston Salem baseball

Posted on July 7, 2008 
Filed Under Community, Just for Fun | 2 Comments

The future home of Winston-Salem’s “minor league baseball team” has started to take shape. A few weeks ago crews started erecting the grandstand and concessions structure.

To check on the baseball stadium progress visit the TruLook Stadium Cam located at the site. And here’s a tip: You can move the cam left or right and also zoom in to any part of the site. All you have to do is create a square with your mouse cursor and BOOM! You are there. To view the Baseball Cam - Click Here.

To find out more about the new stadium and reserving your seat for the First Pitch in the Spring of 2009 visit http://www.baseballdowntown.com.

Just Announced! the Best of Winston Salem

Posted on July 3, 2008 
Filed Under Community, Just for Fun, News, Reviews | Leave a Comment

Smittys Notes Best of Winston Salem

Just announced are the 2008 Smitty’s Notes Best of Winston-Salem awards, the best of what readers of Smitty’s Notes like and appreciate about Winston-Salem.

While many of these winners may seem like no-brainers, a few of them are new on the scene (or maybe I just need to get out more). There are also a few categories missing (IMHO). Like “Best Doughnuts” or “Best Lunch Bargain” or “Best Kids Dining” or “Best Greasy Spoon.” Then again, maybe it’s just me. What do you think?

Gas Prices May Encourage More Walking

Posted on June 25, 2008 
Filed Under Community, Green, Just for Fun, Real Estate | 4 Comments

If you’re moving into a new neighborhood the ability to walk to destinations might be a determining factor when deciding where to live. Especially when you take into consideration the cost just to drive to the grocery store and back. A new Web site promises to help you figure out how walkable your neighborhood really is by rating how far you have to go on foot to do your errands and have a good time.

The Web site, Walk Score, sizes up the stores, restaurants, schools, parks and other destinations within walking distance of a given property and uses that information to calculate a walkability score between zero and 100.

Walk Score looks at the distance to walkable locations near an address, calculates a score for each location, and combines all of the scores into a single measurement. Walkscore creator, Matt Lerner said research shows that the average person is willing to walk less than a quarter mile to destinations they visit frequently, such as a grocery store.


The left column shows the closest location in each category, but is expandable to show all locations within walking distance. You can compare Walk Scores between neighborhoods to help determine an optimal place to live for your exercise needs.

As you can see above, the 810 W Fourth St condos in downtown Winston-Salem have a Walk Score of 77. But what does that mean? The web site provides this guide to help you interpret the numbers:

90 – 100: Walkers’ Paradise. Most errands can be accomplished on foot and many people get by without owning a car.
70 – 90: Very Walkable. It’s possible to get by without owning a car.
50 – 70: Some Walkable Locations. Some stores and amenities are within walking distance, but many everyday trips still require a bike, public transportation, or car.
25 – 50: Not Walkable. Only a few destinations are within easy walking range. For most errands, driving or public transportation is a must.
0 – 25: Driving Only. Virtually no neighborhood destinations within walking range. You can walk from your house to your car!

Rate increase could mean more competition for homes

Posted on June 16, 2008 
Filed Under Financing, News, Real Estate | Leave a Comment

A recent survey and a rate increase could mean more competition for homes

Recent indication is that first time home buyers are getting tired of sitting on the sidelines. According to a recent online poll taken by the National Apartment Association, 17 percent of renters plan to make the jump to home ownership in the next year; 41 percent of the 2,041 respondents planned to be home owners within two years. Only 31 percent planned to still be paying rent five years from now.

Another factor that could very soon contribute to an increase in home buying could be rising mortgage costs. Fixed-rate mortgage rates rose to 6.32 percent, the highest it has been since October. After months of aggressively dropping interest rates, many lenders are worried that the Fed will be forced to raise rates back up. As interest rates rise, so do mortgage rates. According to a press release on freddiemac.com, Frank Nothaft, Freddie Mac vice president and chief economist said that, “Mortgage rates jumped this week after a number of Federal Reserve officials, most notably Chairman [Ben] Bernanke and Vice Chair [Donald] Kohn, expressed concern over a threat of inflation.” We may very well be seeing the beginning of the end of the super-low mortgage and potential buyers may realize that with rising rates, now may be the time to jump in. Nothaft added, “Moreover, pending home sales for April unexpectedly rose by 6.3% and mortgage applications for home purchases … were also up last week.”

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