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"Points" on a new lot loan

Discussion in 'Real Estate' started by iqueequeg, Oct 10, 2005.

  1. iqueequeg

    iqueequeg Beach Lover

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    We're buying a lot and the banks we've spoken with all charge one point for the lot loan. When we built the house we're living in now, we didn't pay any points. What's typical down in sowal?

    I'd add a smiley but can't figure out how all you guys do that. I've got emoticon envy.
     
  2. RiverOtter

    RiverOtter got any pics?

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    Don't know about points but for the emoticons are to the right and you just click on one. Like so :D
     
  3. iqueequeg

    iqueequeg Beach Lover

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    I guess I meant all those fancy emoticons. The barfing ones in particular looked good (although maybe not apropos for this message). Also, when I add icons, they end up at the top, like so.
     
  4. RiverOtter

    RiverOtter got any pics?

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    :scratch: Hmmmm.... I think I see the problem. You are adding the icons under the posting box. Those only show up at the top of your post. You need to click on the emoticons to the right of the posting box. Like so :doh:
     
  5. Kimmifunn

    Kimmifunn Funnkalicious

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    Or like so... :funn:

    Please notice the name of this smilie...could Kurt have named this one after the K/J-funns?
     
  6. Smiling JOe

    Smiling JOe SoWal Expert

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    Points are just a bank's way of confusing you, like other businesses sometimes attempt. One example which comes to mind are mattresses. To prevent you from shopping from store to store, or online, for the best price for a mattress, each store has a different name or number for the exact same product found in a competitor's store. In Store A, the Seally Dreamsicle may be Store B's Seally Pleasuremate.

    The banks do a similar thing. In order to attract you to "better" rates, they will advertise a lower rate, let's say 5% when the norm is 6%, but they may charge you 1 point. Most consumers are left in the dark with a random guess as to which bank has the best deal.

    A loan of 5% with 1 point, is essentially an effective rate of 5.125. One point is equivalent to 1/8 (or .125) of a percent on your loan. The point is equivalent to one percent paid to the bank at the beginning of the loan. So basically, on a $100,000 loan, using the above numbers, of a 5% rate with 1 point, you are actually borrowing $99,000 ($100,000 loan - 1 point (or 1%, which equals $1,000 in this case)).

    Hopefully, this will not be too overwhelming to comprehend. Focus on the bold typeface to calculate what the bank is really quoting you. Banks may also add other misc fees or admin fees, etc, so be sure to ask about all possible charges. Also find out about all potential penalties, such as penalty for early repayment or semi-monthly payments.:D
     
  7. Bob

    Bob SoWal Insider

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    there is no typical loan. the one point is most likely an origination fee. use a broker and don't pay points.
     
  8. GVM

    GVM Beach Lover

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    Have the local banks gotten more conservative with lot loans? A couple of years ago they were really pushing hard. Very good for investors.
     
  9. Smiling JOe

    Smiling JOe SoWal Expert

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    Currently, the banks are not so quick to give interest only lot loans. I work closely with a few banks, and they are much tighter now, which is a good thing IMO.
     
  10. bsmart

    bsmart brain

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    Like all GA grads you have the answer for everything :D .
     
  11. SHELLY

    SHELLY SoWal Insider

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    Yesterday the Fed waived another red flag at the lenders of residental AND commerial money. If they heed the Fed's warning (and they will) the speculative buying will cease and prices will level and some (especially condos) will drop.

    http://www.washingtonpost.com/wp-dyn/content/article/2005/10/12/AR2005101200949.html
     
  12. Bob

    Bob SoWal Insider

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    be careful as that yield difference changes w/ the term o" loan.
     

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