MORTGAGE RATES » Home Mortgage Loan News

For decades consumers have believed that owning your own home is the way to build independent wealth. The efforts of buying a home, remodeling to upgrade, and making timely mortgage payments was supposed to result in the eventual increase in home values and more financial gains for the homeowner in question. However, some may be scratching their heads out of confusion, because for the first time in decades, homeowners who have followed that script to a "T" actually have experienced the opposite in the form of declining home values. Now they are left wondering if the value of home equity is a myth.

Those who are concerned and plan to live in their home for the long run need will ultimately have their patience rewarded. Yes, there has been a declining spiral of home values and the American real estate market has yet to hit rock bottom. But once that happens (and it is looming on the horizon), the industry will now have the back bone and insight to rebound strongly.

Historically, the home values have kept pace with inflation, so that is sure to continue in the future. Additionally, home values have a direct correlation with personal income. Although at this time, when many jobs are unstable and many people are without income, the effect is negatively impacting home values, but this too shall pass. Even if unemployment hits the double digits, it will only be temporary and the employment sector will bounce back with new jobs and more personal income gains.

The late real estate boon was based on lax loan procedures and widely available credit. Since that is no longer readily available, that party is over. However, when the economy stabilizes, and it will, home values will continue on its traditional path of being an excellent investment for your financial security.

Nothing says safety and security like home. Buying and owning and maintaining a home is central to the American Dream, and just about everyone wants, at some point, to own one. It's clearly the ideal place to settle down and raise a family. Given the current economic collapse, with its epicenter in the real estate industry, now is a very, very good time to buy.

If you're in the process of buying a home, or are thinking about it, then you're going to need a mortgage. One term that is critical to understanding how mortgages work is the "point." Understanding points can help you evaluate mortgages better in order to find the one that suits you best.

What Are Points?

Points are basically fees that you pay in order to get a mortgage. They are costs on top of the actual mortgage itself, and they are a reflection of the size of the mortgage. A point is 1 percent of the total loan amount. So, if you're getting a home mortgage loan for $100,000, one point is $1,000. Points are used in determining two further aspects of the loan process: loan origination points and discount points.

What Are Loan Origination Points?

Loan origination points are points charged by the bank, credit union, or other lending institution which is lending you your mortgage loan.

Again, mortgage points are distinct from the loan itself. When you pay your points you are still going to be paying interest on your mortgage loan, with interest. If you can, avoid a loan offer that has origination points attached to it.

What Are Discount Points?

Discount points are points that you can prepay. The more points you prepay, the lower your interest rate will be. So, you can pay these discount points up front in order to get a lower interest rate on your loan.

To learn more about points, origination points, discount points and other terms relating to buying a home and mortgages, be sure to speak with a financial adviser to get the best advice and the full story.

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