| This is always an important part of the home finance | | | | perfect home for you and take a chance of someone |
| process. How do you plan on this? It can sometimes | | | | else making an offer first and you loosing out? |
| be a waiting game. You are in the market for a home | | | | These are all ramifications of playing the lock in the |
| and you have been watching the interest rates. Can | | | | interest rate game. Sometimes, if not most of the time, |
| you afford to wait or will you loose a quarter or a half | | | | the interest rates are not moving that fast so locking in |
| percent if you wait? Will you loose a percent if you | | | | is a get what you get situation. Can you change that |
| wait? That is the question. | | | | situation? Yes, you can, but you have to have some |
| It used to be that we, as consumers, didn't mind so | | | | money to put down. With the right down payment, you |
| much if a half or three quarters of a percent slipped | | | | can lower that rate by sometimes as much as two |
| one way or another. It meant a higher interest rate and | | | | percent. Sometimes lowering it three quarters of a |
| depending on the amount of the home loan, it may | | | | percent makes all the difference in the world! When |
| have represented a large chunk of interest over a | | | | you look at an amortization schedule for the rate, what |
| thirty year period. Now, it's not that it's not important | | | | you pay over a thirty year period can give you a |
| mind you, but as a tax write off, depending on your | | | | stomach ache. It's best not to even think about it. We |
| income level, the advantage at year end for a | | | | know for most consumers that just paying an extra |
| significant tax return was a little bit of a pacifying trade | | | | payment a year can shorten that home loan by nine to |
| off. | | | | eleven years on a thirty year loan. Of course, that |
| More interest paid on home loans, means less you | | | | saves and replicates having gotten a lower interest |
| won't owe on payroll income taxes. Of course, that is | | | | rate. |
| providing this will be your primary residence. When | | | | So you see, maybe you can't lock in lower than you |
| you've rented for years and you suddenly are able to | | | | wanted, but there are ways to subsidize that lower |
| buy your first home it seems like a dream come true. | | | | rate by making extra payments. I challenge you to do |
| Then after that first year of making those mortgage | | | | the math. If you are buying, look at two different |
| payments you file your income taxes at the end of the | | | | interest rates. Then, take an amortization schedule and |
| year and in most, if not in all cases, you are in | | | | look at the amount you pay just against the principal. |
| suspense while your taxes are being prepared. | | | | Do the math as if every payment you're paying it is |
| For most people though, that year end tax return puts | | | | adding just an extra principal payment. Look at how |
| a smile on your face and when you get it, you always | | | | much you actually save in interest, and how short your |
| debate that shopping spree! Well again, locking in an | | | | loan really becomes after you do it for three years. |
| interest rate has to be tricky at best, but if you play it | | | | You will be shocked. If you can afford it, this is the |
| right, it's not that hard. Especially in today's market with | | | | way to go. Your principal might be just over a hundred |
| so many houses on the market and interest rates so | | | | or one hundred and twenty five dollars a month, but a |
| low. Sometimes it's a chance; do the rates look like | | | | double principal payment drastically shortens that thirty |
| their going to go up, stay the same, or go down? Can | | | | year mortgage. |
| you afford to hesitate when you find that almost | | | | |