Home Buyers Guide from Tammy Mitchell Hines & Co. Workbook for Home Buyers | Page 36

Can I get an FHA or VA mortgage?
Just about anyone can apply for an FHA-insured
mortgage through banks and other lending
institutions. They are particularly well suited for
buyers of moderate income; the low down payment
requirements (as low as 3% of the purchase price)
are matched by a relatively low maximum mortgage
amount.
Similarly, VA-guaranteed loans often require no
down payment for up to four times the amount
guaranteed by the VA. These loans are reserved for
active military personnel, veterans, or spouses of
veterans who died of service-related injuries.
What are “points”?
In real estate, the term "point" refers to a percentage,
usually 1% of the total mortgage loan amount.
Buyers often pay lenders this supplemental fee,
calculated in points, to get a better interest rate on a
particular mortgage.
For instance, a lender may offer you a choice of two
30-year mortgages: the first at 10% with no points
and the second at 9% with an additional three points.
If the loan is for $100,000, those three points will
cost you an extra $3,000 up front—but you’ll get a
payback of significantly lower monthly payments
($840.85 vs. $877.57) for the lifetime of the loan.
Many lenders will advise you to pay the points for
the better rate if you can afford it, especially if you
plan on keeping the home for more than a few years.
Like interest, the money you pay for points may be
tax-deductible, and the investment may pay for itself
through savings generated by lower monthly
payments. We suggest you call your tax preparer for
more information.
www.CallTammy.com

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What is APR, and how is it calculated?
The annual percentage rate is a calculated rate of
interest for a loan over its projected life. This rate
includes the interest, all points (which are considered
prepaid interest), mortgage insurance, and other
charges associated with making the loan that the
lender collects from the borrower. The APR is
calculated by a standard formula that all lenders use.
This enables the borrower to comparison shop
between lenders and/or loan products, base