Comments on: What’s the Point? http://raincityguide.com/2007/03/03/whats-the-point/ Seattle's Leading Resource for Real Estate Information Thu, 11 Mar 2010 19:33:24 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Kary L. Krismer http://raincityguide.com/2007/03/03/whats-the-point/#comment-330817 Kary L. Krismer Mon, 29 Dec 2008 18:10:43 +0000 http://raincityguide.com/2007/03/03/whats-the-point/#comment-330817 Re habits, a couple of years ago I came across a neighborhood, in Marysville I think, where everyone seemed to refinance at least once a year. It was very odd how widespread it was. I suspect just about anything in that neighborhood today is probably a short sale. Re habits, a couple of years ago I came across a neighborhood, in Marysville I think, where everyone seemed to refinance at least once a year. It was very odd how widespread it was. I suspect just about anything in that neighborhood today is probably a short sale.

]]> By: Rhonda Porter http://raincityguide.com/2007/03/03/whats-the-point/#comment-330785 Rhonda Porter Mon, 29 Dec 2008 05:04:24 +0000 http://raincityguide.com/2007/03/03/whats-the-point/#comment-330785 Thanks, Michael! Happy New Year. BTW I'm taking this week off and probably won't be around much for commenting. See you all in 2009! Thanks, Michael! Happy New Year.

BTW I’m taking this week off and probably won’t be around much for commenting. See you all in 2009!

]]> By: Michael P Lindekugel http://raincityguide.com/2007/03/03/whats-the-point/#comment-330784 Michael P Lindekugel Mon, 29 Dec 2008 04:44:16 +0000 http://raincityguide.com/2007/03/03/whats-the-point/#comment-330784 Setup two amortization tables. Compare the total costs month by month from each table until the higher cost loan is now the lower cost loan. The month of the change is the break even point. In this example the point is 33 months. 5% @ 2 point Total cost $61,896 = $70,861 principal and interest + $8,000 points – $16,965 principal reduction. 5.75% @ 0 points Total cost $62,139 = $77,032 principal and interest + $0 points – $14,893 principal reduction. yes, I read your earlier comments. Setup two amortization tables. Compare the total costs month by month from each table until the higher cost loan is now the lower cost loan. The month of the change is the break even point. In this example the point is 33 months.

5% @ 2 point
Total cost $61,896 = $70,861 principal and interest + $8,000 points – $16,965 principal reduction.

5.75% @ 0 points
Total cost $62,139 = $77,032 principal and interest + $0 points – $14,893 principal reduction.

yes, I read your earlier comments.

]]> By: Rhonda Porter http://raincityguide.com/2007/03/03/whats-the-point/#comment-330774 Rhonda Porter Mon, 29 Dec 2008 02:15:09 +0000 http://raincityguide.com/2007/03/03/whats-the-point/#comment-330774 Michael, I should have been more clear--sorry. Can you clearly show in detail how you came to your figures so everyone can understand. I like to give actual examples so we can follow your example instead of just reading your answer. If you've read my earlier comments, my "street" or "quick" math may not be perfect, but if someone is in need of ball park figure, it serves that purpose. Michael, I should have been more clear–sorry. Can you clearly show in detail how you came to your figures so everyone can understand. I like to give actual examples so we can follow your example instead of just reading your answer.

If you’ve read my earlier comments, my “street” or “quick” math may not be perfect, but if someone is in need of ball park figure, it serves that purpose.

]]> By: Michael P Lindekugel http://raincityguide.com/2007/03/03/whats-the-point/#comment-330773 Michael P Lindekugel Mon, 29 Dec 2008 01:22:16 +0000 http://raincityguide.com/2007/03/03/whats-the-point/#comment-330773 I calculated the answer long hand with amortization tables adding up the total cost of the loans less the principal reduction until the break even point is met. The Decisionaide calculators will produce the same result. Rhonda there is no hostility toward you. I think I asked a simple question. Do you believe a margin of error of 10 months or 30% is acceptable for your clients? I calculated the answer long hand with amortization tables adding up the total cost of the loans less the principal reduction until the break even point is met. The Decisionaide calculators will produce the same result.

Rhonda there is no hostility toward you. I think I asked a simple question. Do you believe a margin of error of 10 months or 30% is acceptable for your clients?

]]> By: Rhonda Porter http://raincityguide.com/2007/03/03/whats-the-point/#comment-330771 Rhonda Porter Mon, 29 Dec 2008 00:54:45 +0000 http://raincityguide.com/2007/03/03/whats-the-point/#comment-330771 Michael, I'm not sure where your attitude towards me comes from but I sense a bit of hostility. Would you mind sharing how you came to your results instead of just declaring me wrong? Michael, I’m not sure where your attitude towards me comes from but I sense a bit of hostility.

Would you mind sharing how you came to your results instead of just declaring me wrong?

]]> By: Michael P Lindekugel http://raincityguide.com/2007/03/03/whats-the-point/#comment-330769 Michael P Lindekugel Mon, 29 Dec 2008 00:49:54 +0000 http://raincityguide.com/2007/03/03/whats-the-point/#comment-330769 Rhonda, With 5% @2 points and 5.75% @0 points your simple street math of 43 months is off by 10 months or 30%. The correct break even point is 33 months. Do you believe a margin of error of 10 months or 30% is acceptable for your clients? Rhonda,

With 5% @2 points and 5.75% @0 points your simple street math of 43 months is off by 10 months or 30%. The correct break even point is 33 months.

Do you believe a margin of error of 10 months or 30% is acceptable for your clients?

]]> By: Rhonda Porter http://raincityguide.com/2007/03/03/whats-the-point/#comment-330751 Rhonda Porter Sun, 28 Dec 2008 19:05:15 +0000 http://raincityguide.com/2007/03/03/whats-the-point/#comment-330751 Kary, I remember doing my last mortgage (before I was in lending) and my LO suggested that I consider an ARM with a lower rate because of how often I moved (that was my 5th home purchase). For some reason, I felt a little insulted and stuck with my 30 year fixed, ignoring his advice. It would have made sense to opt for the ARM because in hindsight, I did refi again just a year later. I had a 90% LTV w/MI (can't remember what the rate was) and the bank would not drop my MI due to not meeting the seasoning requirements even though home values were climbing then. So..I refi'd to a 5 year ARM (I was in mortgage w/this refi) at 3.625% because I was pretty sure I'd be selling the home by the 5 year period (and moving in w/my now husband)...oh...and I dropped the pmi. It is important to know what someone's habits are with their mortgage. My LO tried to provide me with good information but I wasn't able to listen. If someone tends to refinance often or if they tend to buy homes and not keep them for a long period of time (I was "trading up" and not keeping as investments), they should try to obtain mortgages with zero points and/or zero closing costs. With that said, our current pricing that's available doesn't make zero points or zero closing costs attractive what-so-ever. Kary, I remember doing my last mortgage (before I was in lending) and my LO suggested that I consider an ARM with a lower rate because of how often I moved (that was my 5th home purchase). For some reason, I felt a little insulted and stuck with my 30 year fixed, ignoring his advice.

It would have made sense to opt for the ARM because in hindsight, I did refi again just a year later. I had a 90% LTV w/MI (can’t remember what the rate was) and the bank would not drop my MI due to not meeting the seasoning requirements even though home values were climbing then. So..I refi’d to a 5 year ARM (I was in mortgage w/this refi) at 3.625% because I was pretty sure I’d be selling the home by the 5 year period (and moving in w/my now husband)…oh…and I dropped the pmi.

It is important to know what someone’s habits are with their mortgage. My LO tried to provide me with good information but I wasn’t able to listen. If someone tends to refinance often or if they tend to buy homes and not keep them for a long period of time (I was “trading up” and not keeping as investments), they should try to obtain mortgages with zero points and/or zero closing costs. With that said, our current pricing that’s available doesn’t make zero points or zero closing costs attractive what-so-ever.

]]> By: Kary L. Krismer http://raincityguide.com/2007/03/03/whats-the-point/#comment-330746 Kary L. Krismer Sun, 28 Dec 2008 17:22:10 +0000 http://raincityguide.com/2007/03/03/whats-the-point/#comment-330746 Rhonda wrote: "I also review what the consumers long and short term plans are–what’s on the horizon for them. How long do they picture themselves living in this home or retaining the mortgage (are they likely to refinance)?" Yes, I had missed this. It makes me realize that I'm not only a real estate agent's worst nightmare, I'm also a mortgage broker's worst nightmare. In my 50 years I've only bought two places and refinanced twice (and one of those was out of a 10.25% loan). If everyone was like me, agents and mortgage brokers would starve to death. If everyone was like me, the entire economy would collapse because I tend to use things longer than most, and don't buy a lot of crap. Rhonda wrote: “I also review what the consumers long and short term plans are–what’s on the horizon for them. How long do they picture themselves living in this home or retaining the mortgage (are they likely to refinance)?”

Yes, I had missed this.

It makes me realize that I’m not only a real estate agent’s worst nightmare, I’m also a mortgage broker’s worst nightmare.

In my 50 years I’ve only bought two places and refinanced twice (and one of those was out of a 10.25% loan). If everyone was like me, agents and mortgage brokers would starve to death. If everyone was like me, the entire economy would collapse because I tend to use things longer than most, and don’t buy a lot of crap.

]]> By: Rhonda Porter http://raincityguide.com/2007/03/03/whats-the-point/#comment-330742 Rhonda Porter Sun, 28 Dec 2008 17:12:04 +0000 http://raincityguide.com/2007/03/03/whats-the-point/#comment-330742 Kary, I think you caught me editing my comment. Since it was a lengthy response...I wanted to "save" as I wrote it. Happy New Year! Kary, I think you caught me editing my comment. Since it was a lengthy response…I wanted to “save” as I wrote it. Happy New Year!

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