May 28th, 2008 - When Should You Pay Points?

Welcome to the Inside Track – My name is Brian Yampolsky and I am one of the owners of Orion Mortgage Corporation in Phoenix, AZ. In less than 2 minutes, we share helpful information for home owners and buyers about the mortgage industry.

Today’s topic is about “Points” - What are they & and when you should pay them?

One of the most misunderstood parts of the mortgage process (and there are many) has to do with points. Many of our clients don’t know what points are or when it makes sense to pay them.

For starters, let’s define what a point is. A point (sometimes referred to as a “discount point”) is equal to 1% of your loan amount. So, on a $300,000 loan, 1 point = $3,000. When you pay points, all you’re doing is pre-paying interest in order to get a lower rate on your loan, which will obviously result in a lower monthly payment.

Paying points is an option – you don’t have to pay them. You should know that you can negotiate to have the seller pay points for you or you can obtain a mortgage with 0 points. When you are trying to determine whether paying points is a good or a bad idea, you need to factor in how long you plan on keeping the loan. You wouldn’t want to pay thousands of dollars in points if you were planning to sell your home or pay off your loan next week, next month or even next year. But at some point, usually in the 3rd or 4th year, the lower monthly payments will begin to outweigh the upfront cost of the points.

To sum up – there are two very important things you need to know;

#1) Points are negotiable between you and the seller – all you have to do is ask. When refinancing, you also have the option to pay points or 0 points – your lender should be presenting both options to you.

#2) Points are tax deductible. You can even deduct the points if the seller pays them on your behalf! Of course, you want to consult with your tax professional regarding your own scenario.

That’s it for today - If you have any questions about today’s topic, just send us an email to: Briany@orionmtg.com or call 602-912-0222 and we’ll be glad to advise you with the right information to help you make the right decisions.

Until next time!

Brian Yampolsky

Why FHA Loans Are Popular Again...

Welcome to the Inside Track – My name is Brian Yampolsky, co-owner of Orion Mortgage Corporation. We talk about and share helpful information about the mortgage industry in the Phoenix Metro Area.

Today’s topic is Why are FHA loans are so popular in today’s market.

FHA loans were very prevalent in the 1990’s and early 2000’s. However, around 2003 there were 2 main shifts in the industry that reduced the amount of new FHA loans; 1) the Phoenix Metro Area saw property values increase to a point that exceeded the maximum FHA loan limit, and 2) conventional loan programs were created through FNMA and FHLMC that offered some of the same features that were previously only available
through FHA loans, such as more flexible credit underwriting and low/zero down payment.

During 2007 and 2008, many lenders have exited the industry and many of those flexible loan programs have also gone away. The local AZ market has been deemed a “declining market” and as such, most lenders have reduced their maximum loan amounts by 5%. There have also been rate adjustments added to those FNMA & FHLMC programs, meaning - if your credit score or down payment is lower, you’ll pay a higher rate. With the tighter restrictions and higher rates on FNMA loans, it was only a matter of time until borrowers began to look again at FHA loans. They are gaining popularity with today’s client who might not have much equity, down payment and a credit report that might be less than perfect. In fact, it is also one of the few remaining Zero Down loan programs available to home buyers.

If you have any questions about today’s topic, just send us an email to: Briany@orionmtg.com or call 602-912-0222 and we’ll be glad to advise you with the right information to help you make the right decisions.

Until next time!


Brian Yampolsky, Owner
Orion Mortgage Corp
602-912-0222

The Orion Mortgage "Inside Track"

Welcome to my new blog. I'll be posting videos of helpful mortgage tips and Q&A for home owners and realtors. More to follow!