Rooftop Views

Should you buy down points?

We came across a study by two experts about whether or not to buy points to lower the interest rate on your mortgage. Their conclusion, most often it doesn't pay off.

Generally, they found that those who buy points overestimate the amount of time they will hold their loans. Usually they paid off their mortgages over 3 years too early for the points to actually pay off.

As you know, buying points lowers the interest rate on the mortgage. One point is equal to 1 percent of the mortgage, charged as prepaid interest. In order for that up front payment to make sense, the mortgage must be in existence long enough to recover the up front costs. That length of time differs with the length of the loan, the amount of the mortgage and the number of points bought down.

According to the study by Abdullah Yavas Elliot of Penn State and Yan Chang of Freddie Mac, only 1.4% of borrowers who purchased points held their loans long enough to make it pay off. Of those who didn't buy points, only 1.5% would have been better off purchasing them.

Maybe it makes more sense to take the money that would have been spend on points and either pay down the mortgage or put it into a savings account earning interest.

5:39 PM - Jan. 4, 2006 - comments {0} - post comment

What's In with Homebuyers 2007

Mark Nash, nationally syndicated real estate columnist and real estate broker, has come up with the following list of what's IN with Buyer's in 2007. They include:

Homes that are priced right. It isn't the boom market of 2005, look at only the sold comparable's from the last six months. Forget the cocktail party chit-chat when all you heard was record prices in the shortest market times in U.S. real estate history.

Online home valuation sites ( Zillow.com). Mainly those that utilize up-to-date and reliable home sale data. Technology is great when it works, but tread carefully with online valuation web sites. Ask yourself how long does it take your recorder of deeds and real estate transactions to record them? If up-to-the-minute, okay, otherwise plan the lead time into the online valuation to spew out accurate information.

Market timing. Many buyers and sellers were on their own timelines in 2006 and they missed opportunities that were created by not recognizing the real estate markets ebb and flow. Spring is high market, the most demand by the largest number of buyers. Summer is a good market, fall is fair, and winter is the remnant market, the left-over buyers and sellers from the high, good, and fair markets.

Savvy buyers. With interest rates historically low and bent-up demand from a soft year in 2006, the deals and lack of frenzy won't last long. "Deferred demand" from 2006 could ignite a mini-frenzy in some markets.

Third places or officetels. Home offices are on the rise, though those who work from one, need more than a coffee shop or hotel lobby for business meetings. Look for alternative work spaces that bridge the home office with hourly rentals of conference room-type spaces that offer technology and privacy.

Upscale garages. It's no longer the out-of-sight-out-of-mind dumping ground. Today's garage owners want them decked out with cabinet and storage systems, mini-refrigerators, insulation, heating and air conditioning and durable but residential-looking flooring.

Caving. Man caves and Mom caves are coming out of the closet. Personal dedicated space for one person in a household can go and work on projects or "chill" without being disturbed and if so only in an emergency.

Two home offices. Rising gas prices and commuting times have created more two-work-at-home families. Size matters, make sure each is at least ten-by-ten feet.

Rejuvenation rooms. A one-stop space for exercising, meditation, yoga, sauna and fancy steam showers. Showers are going upscale too. Waterfall fixtures, programmable temperature and water flow are the next trend for "showerers".

Heated patios, walkways and driveways. Northern baby-boomers are tired of shoveling and are looking for ways to decrease winter maintenance, plus many have discovered how also heating the patio can add an extra couple of weeks enjoyment in spring and fall.

Snoring rooms. Offered as options in new homes, adjacent, second bedrooms to the master, offer relief from the "buzz saw" and an alternative to the couch. A godsend for millions of relationships nationwide.

Modular Housing. Many think of the out-dated double wide as the typical modular, but modular options and quality have exploded from the top end 11,000 square foot home, with every whistle and bell, complex finishing details, to the bread and butter 1200 square foot starter home. Low-cost, factory-built construction and quick conception to foundation times, make this the affordable wave of the future.

Sustainable Design. Sustainable design is based on three areas; energy conservation, indoor air quality, and resource conservation. Viewed as new-age in construction circles, sustainable design looks at homes holistically, and not just a group of unrelated systems thrown together. Natural forms of energy, such as wind, solar, and geo-thermal if available on-site, are maximized.

Structured wiring. Right up there with all the buzz about green homes is structured wiring, now entering the main stream must-have for technology based home buyers. Coaxial TV cable (RG-6), Category 5E voice and data lines, distributed radio, remote camera security are wired through out a home into multi-outlet boxes called in the trade, home network centers.

Mixing finishes on kitchen base and wall cabinets. Matchy-matchy is out in kitchen design. The new look is to have stained-wood bases and painted wood upper cabinets. The old-europe-look rules, but with today's appliances