Please explain what & how this works with a mortgage...?

Question

There is a house I'm interested in buying for me and my 2 little girls. I dont know anything about real estate so looking for help before I call about the house. Please explain what it means with $100 down $410 per month PI@ 6% interest...is this a good deal or no?

Answer 1

$100 down means $100 DOWN PAYMENT to close or buy the property.  $410 per month PI means that Principal and interest 2 out of 4 parts of your house pyment is $410 a month BUT your TOTAL monthly payments also includes taxs and insurance.  Taxs are property taxs that are paid to the counrty and that amount can be found on tax records.  Divide the total tax bill by 12 to see how much each months amount will add to your montly payment.  Insurance is also another cost per month and can be found by calling insurance companies and getting quotes for home owner's insurance.  All of this together is call PITI and is your monthly house payment.

  6% interest is the rate you are offered for the loan to purchase the house.  Depending on your credit history and other factors this may or may not be a decent rate.

  This is the PRICE of the house that they are trying to sell.  It has NOTHING to do with the VALUE of the house so there is NO POSSIBLE way to determine the "value" from looking at price.  If i wanted to sell you a watch, the PRICE I set has nothing to do with the value you THINK the watch has.

  In today's market in most areas of the USA; houses are going DOWN in value and loans are hard to get so SOME seller's are using "owner finance" in order to sell their real estate at HIGHER [prices and are trying to use things like "LOW down payment", "$410 a month PI" to lure you into thinking you are getting a house for $410 a month but reality is that AFTER taxs and insurance and gas and phone and electricity, etc. your TRUE cost of living there is MUCH higher.  They WANT you to SEE $410 and NOT the TOTAL cost per month or the TOTAL Price tag of the house so you will fall in LOVE with the paint color and FORGET abot the VALUE versus price.

  Your BEST source of information is a real estate agent that can COMPARE this house with ALL others on the market in your area and EDUCATE you on price/value.  Are ALL real estate agents good at this?  NO!  Call 4 or 5 real estate companies and talk to SEVERAL agents until you find one that you THINK has the experience to KNOW what is a goood deal and what isn't.  LOTS of agents will try to "sell" you on cozy, cute, fresh paint, etc. but you CAN find one that will walk you thru the NUMBERS and explain what a good INVESTMENT can and should do for you.  

Answer 2

.   You can do this. Easy.  Your mortgage will cost you $8 per month for every $1,000 that you borrow.  A $50,000 loan has payments of 8x50= $400 a month.   $100,000  would be $800 a month.  That is everything except utilities.  Can you afford that much a month.  If so, you will be fine.

There are mortgages where your first 6 payments are $410 a month. Then they go up.  How high?  No one knows.  It can go up to $810 in some cases.  So you can not trust that ad for $410 a month.  It is not a lie but it is not what you want.

Part of getting a loan is having 3 things:   good credit,  good job, a track record of saving money each month.

The worst loans need zero money down payment.  THe best loans need 20% down payment.  How much can you put down.  This has to be cash.  No borrowed money.