On Sunday, June 8, 2014 10:20:00 AM UTC-4, o m e H o m e G u y wrote:
You don't even know what points are, yet you're here pontificating
on all kinds of things related to mortgage rates that are way beyond that.
Typical, for the village idiot.
The claim that the same thing doesn't exist in Canada, is obviously BS.
In Canada, it's called "buying down". In the USA it's called points.
With either, buy paying some cash upfront, you lower the interest
rate for the duration of the loan. Dial in the lower interest rate
that you want in that Canadian calculator, and it shows the buydown,
ie "points" that you have to pay.
Per the above, Canada has the exact same thing as our points.
Unheard of to the village idiot. Not unheard of to the mortgage
industry and those with a brain:
"Your Credit Report
A good credit report and credit score are important factors in determining
whether or not you will be approved for a mortgage. Here are some simple st
eps you can take to maintain a good credit history -- and improve your chan
ces of being approved.
What is a Credit Score?
Your credit score is a number that illustrates your financial health at a s
pecific point in time. It also serves as an indicator of your financial pas
t, and how consistently you pay off your bills and debts. This is one of th
e factors mortgage professionals consider in qualifying you for a mortgage.
How to Check Your Credit Score
To find out your credit score, contact Canada's two credit-reporting agenci
es: Equifax Canada at www.equifax.ca and TransUnion Canada at www.transunio
For a fee, these agencies will provide you with an online copy of your cred
it score as well as a credit report -- a detailed summary of your credit hi
story, employment history and personal financial information on file. You c
an also obtain a free copy of your credit report by mail. If you find any e
rrors in your report, notify the credit-reporting agency and the organizati
on responsible for the inaccuracy immediately."
What a buffoooooon!
Explain how you can possibly come out ahead by paying up-front to reduce
your mortgage rate when instead you can apply that same payment to
increase your downpayment.
I've never heard of this, but then again it's been 14 years since I had
to deal with getting a mortgage.
Mortgage Points: What's The Point?
By Lisa Smith on August 10, 2012
The structure of home mortgages varies around the world. Paying for
mortgage points is a common practice in the United States and, at least
according to anecdotal evidence, it may be a uniquely American approach
to home financing.
What Mortgage Points Are
Mortgage points come in two varieties: origination points and discount
points. In both cases, each point is equal to 1% of the total amount
mortgaged. For example, on a $100,000 home, one point is equal to
$1,000. Origination points are used to compensate loan officers. Not all
mortgage providers require the payment of origination points, and those
that do are often willing to negotiate the fee. Origination points are
not tax deductible.
Discount points are prepaid interest. The purchase of each point
generally lowers the interest rate on your mortgage by 0.25%. Most
lenders provide the opportunity to purchase anywhere from zero to three
discount points. We will focus mainly on discount points and how they
can decrease your overall mortgage payments. It is important to note,
however, that when lenders advertise rates, they often show a rate that
is based on the purchase of points.
What a lot of mumbo-jumbo those "points" are.
I can tell you that it's not common here in Canada to have a mortgage
where these points are an option.
As the blurb above implies, you're pre-paying a part of your interest,
and as the rest of the article explains, whether it pays off in your
favor depends on how long you live in the house.
Consider the following example:
* On a $100,000 mortgage with an interest rate of 6%, your monthly
payment for principal and interest is $599.55 per month.
* With the purchase of three discount points, your interest rate would
be 5.25%, and your monthly payment would be $552.20 per month.
Purchasing the three discount points would cost you $3,000 in exchange
for a savings of $47.35 per month. You will need to keep the house for
63 months to break even on the point purchase. Since a 30-year loan
lasts 360 months, purchasing points is a wise move if you plan to live
in your new home for a long time. If, on the other hand, you plan to
stay only for a few years, you may wish to purchase fewer points, or
none at all.
Regarding mortgage terms:
For example, in Canada the longest term for which a mortgage rate can be
fixed is typically no more than ten years, while mortgage maturities are
commonly 25 years.
Mortgage interest is not deductible in Canada, hence Canadian homeowners
tend not to find long-amortization mortgages attractive. CMHC mortgage
insurance does not insure mortgages with amortization terms longer than
While mortgage interest is not deductible in personal income tax in
Canada, any capital gains you make on the sale of your primary residence
is tax-exempt. (and as a side note, any lottery winnings you have are
What's in your credit report is some sort of summary of how you've
handled your debts, any that you've defaulted on, etc.
Your actual credit SCORE (that number between 300 and 900) is computed
based on some sort of "secret" forumula, and you don't get that number
as part of your "free" credit report.
Anyone (including you) that wants to know your credit SCORE has to pay
$25 to get it.
Apparently, someone that always pays off their debts in full (ie -
paying off entire monthly credit-card balance) can actually have a LOWER
credit SCORE than someone who maintains a balance (but always pays at
least the monthly minimum amount). The explanation is that someone who
runs a credit-card balance (but always pays some of it every month) is
more "valuable" to a lender vs someone who always pays their balance in
On Sunday, June 8, 2014 3:18:23 PM UTC-4, o m e H o m e G u y wrote:
Been there, done that. It lowers the interest rate and the monthly
payment for the duration of the loan. If you can afford and qualify
for a payment of $2000 a month, but you can't qualify and afford
a higher payment, then paying a couple points could mean you can
get the mortgage and the lower payment, while without it you can't.
I also explained to you that points are tax deductible, so if you
pay $3000 in points it's really only costing you $1950. And after
you recoup that amount, you're ahead in paying less interest for
the rest of the loan.
If you don't want to pay points there are plenty of no points
mortages available here. If you want a lower rate, you can get
one with points. What's the problem with people having a choice?
I never said that paying points are a good idea, for most people.
That's how it works. So, again, what's your problem?
No, because as previously explained, points are tax deductible. If you're
in the 35% bracket, you'd be even in just 41 months and ahead after that,
in the USA.
Since a 30-year loan
That's correct, that's how it works.
OMG. If that were going on in the USA you'd say it was a time bomb
and people are getting screwed. What happens if after 10 years rates
are 3x what they are today? And given that they are extraordinarily
low right now, that's a real possibility. What's wrong with you
Canadians and your country? Here you can get a 20 or 30 year fixed
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