I finally figured out what Mortgage Points are, since the last post where I talked about What I’ve learned for the next first time home buyer, I wasn’t really sure what they were.

Essentially, points are percentages of interest that you pay up front, in order to get a lower interest rate on your loan. Basically this means, if a bank offers me a 6.5% interest rate, and I want a 6.0% interest rate, they can say that if I pay an additional $3k up front, that will be worth 2 points off my interest rate, meaning I get lower monthly payments.

Whether or not points are good or bad is entirely up to whether or not you need a lower monthly payment and have extra funds up front to put onto your down payment.

In a way I can see how the system benefits some people, but at the same time, it kinda makes me go “What’s the point?” (no pun intended).

If someone needs a lower monthly payment (like me), it probably means they don’t really make enough to feel comfortable with a large monthly payment. It would also be safe to assume that MOST people in this same condition don’t have a lot of money to put down. So again, poor people suffer because they poor. If you’re too poor to afford the monthly payment, you can put a lot of money down to lower it, but you’re probably too poor to put a lot of money down too.

So there you have it. You can buy down your interest rate if you need to, but it’ll cost a couple extra grand that you probably don’t have Not to mention, it’s paying interest, not the actual loan. So it’s only going to the bank, not actually towards your house. So you gotta decide for yourself whether it’s something that benefits you. Keep in mind you DO have the added benefit LONG term because of the lower rate.

I received my loan papers from Chase yesterday and I’ve been looking over them this morning. I’ve already sent 3 emails to the lender asking questions about certain things. It also looks like they’ve put points on my loan, which I’m really not wanting. So I may have to go search for another lender again that can give me a decent rate -without- points. I know Liberty Mortgage says they don’t use points at all, but the lender I spoke from there didn’t do PA. I may see if someone else there is licensed in PA so I can talk to those guys again.

We’ll see what the Chase representative says first. I may have the money for the points, but I kinda wanted that money to do a few things to the house, so I don’t think I’m really willing to give that up. Sorry. They’ll just have to lose my business if that’s the case

Today was my first mortgage payment to myself. I won’t actually have to start paying my mortgage till November, but I wanted to use September and October to get used to paying the massive payment. So I’ve set up a “mortgage savings account” with ING that I stick this money into, half at the first of the month, half on the 15th. The added benefit of this, is I’ll be at least a month ahead on mortgage payments if I run into a tight month.

Money is definitely going to be tight. It won’t be so bad I think when I’m not paying for the storage trailer each month, which will go away in October once we’ve unloaded all of our things. I think the hardest months are going to be December and January, simply because I’ll be starting to pay folks back that donated money for the down payment, dad won’t have extra money from mowing lawns, we’ll be adjusting to the new house and all its needs, and then we have to fit the holidays in there somewhere.

However, I’ve started planning (again).

Taxes + $7500 first time home buyer bonus is going to probably go towards paying off the rest of the people that donated money, as well as paying off my car. But a lot of this won’t happen until February.

Dad’s loan with the ridiculous interest rate will then be transfered to a 0% interest rate card that I will open up that’s good for balance transfers, and we can start paying that off in 2009. This I will do once #1 above is done.

His medical bills I don’t believe collect interest, so those will just have to be paid slowly as we have the money.

I got to thinking about how I put money away for the holidays every year. It used to be I would put enough money away throughout the year to have over $600 towards Christmas/Yule, with no real set amount or purpose for it. I decided this year that I will probably start designating $100 to each person, plus a little extra for a tree. $100 for my father, $100 for me, $100 towards my sister (maybe less, she has plenty of people to spoil her), and then $60 extra for a tree and cards for my dad). So I’m looking at about $360-$400 total to save up instead of the $600.

That’s $33/month I’ll need to put away, or $17 a paycheck. Not a bad deal, and will be much easier on my finances. I’ll start putting this away this December for next year. We’ll already have $360 or so put away for this upcoming December.

Otherwise this past year I think I’ve done really well reducing my finances to their absolute minimum. I really don’t have any excess bills at all, I have no debt besides my car and mortgage. I just have the minimum average bills. I could certainly cut them down more if things get really crazy. Like removing comcast completely, giving the MUD server costs to someone else for a while, get rid of my cellphone, etc. But there’s no need to do any of that.

I still donate $100 a month to my Roth IRA, I still donate $140 a month into my 401k, I still put money away each month for my car insurance premium so I’m paying less by paying the whole thing at once instead of monthly, I still put money away for the holidays so I’m not hit with the holiday stress of last minute money woes, and I’m still putting away $100 a month into my emergency savings account.

And despite taking several months of tweaking and adjusting to get my monthly bills where I’m satisfied, I think I’ve done a pretty good job.

Septic: 1000 gallon concrete tank in perfect shape. No leaks, no problems with the drain fields, it’s located in an out of the way area that we don’t plan to garden or carry heavy equipment over. And they empty it when they inspect it so no need to service it for a couple years.

Termites: No termites or termite damage. I will be installing termite protection on my own once we move in.

Well/Water: Will take a few days for the water test to complete, but sample was taken today.

FHA Loan Inspection: Not scheduled yet. I know of at least one thing they will have problems with, no hand railings going upstairs. If the seller doesn’t install one, I have no problems installing one myself.

Good info on the first time home buyer tax credit here.
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I’ve been researching the closing process as well as bonuses for first time home buyers.

Zip Realty gave a really informational run down of the closing process for me (I am currently at Stage #2), which gives me an idea of what I need to do to stay on track. I’ve already been researching homeowners insurance, starting with the company I get car insurance with (USAA military insurance), as they may give me a break since I’m already a customer.

btw, if anyone else has any companies they recommend for home owners insurance, let me know.

Also #4 is happening today, the requested inspections on the property, which my father is on his way there for now.

My boss also gave me a letter that she got from her CPA letting me know of a new program passed in 2008 for first-time home buyers that gives them a $7,500 tax credit (I also found information about it here). This is essentially an interest free loan from the Government that you have to pay back over 15 years. You don’t start paying it back till 2010 (if you bought in 2008), so it’s about $500/year that you have to pay back.

I’m in agreement with the blogger in that article though, despite it being a loan and not free money, an interest free loan over 15 years? That’s really not a bad deal, and one I will most likely take up when I do my taxes in February. I haven’t thought about what I’d do with that money yet, I will have to see where my finances stand. I’d really like to pay off my car and finish paying off the people that donated money, which that should cover. But at the same time if there are any improvements on the house that need to be done, I may half it for that as well.

We’ll just see where I am in 6 months and what my needs are at the time.

I logged into my ING account this morning and the money has been removed. Naturally I am sad about it, but at the same time I’m no worse off than I was before. I have the skills and opportunity to still pay off our debts in the old fashioned way, though it will take significantly longer and be much harder.

Still, what a nice thought it was to be debt free and to donate money to people in their own financial struggles

I’m sure this just gives me the opportunity for financial discipline.

I was sitting at the kitchen table this morning, and I picked up my Aunt’s monthly newsletter from one of the old churches I used to attend. It’s an old stone methodist church (On my dads side I was methodist, on my mothers side I was baptist), and where most of my fathers family is buried.

Anyway, they had an introduction in there, as they do every month, from the pastor. It talked about those that want to be healed, and willing to accept the necessary changes for that to happen.

An excerpt:

…When Jesus asked the man whether or not he wanted to be healed, Jesus was reminding him that he had a part to play in his own road to health. The man had to want to be healed, to be willing to deal with the change that his healing would bring

It also spoke about people who see their illnesses or even their depression and “down in the dumps” lifestyle as a crutch or foundation for living. Many people are scared of what changes need to be taken place in order for their lives to improve. What’s the quote from Shawshank Redemption? “Institutionalized”.

The reason I thought this was interesting is because I look over the last few months and how resistant I was initially for all of this change. The very first day we got the eviction notice I felt like my chest was tightening and all I could do was cry. I didn’t want this to happen, I didn’t want change or to move or to be tossed into the unknown like that. I can only imagine it was far worse for my father. He certainly gave up a lot more in the move than I did. His animals, his crops, the fact that he’d been living there mostly since 1979.

But I prayed to the Gods that the ways would be opened for us, whatever they might be. We both decided we were willing to just yank up all of our roots and throw them into the wind and see where we were taken. We were able to leave behind all the dirt and grime and chaos and clutter and rot, while still keeping mementos and general everyday junk.

When I saw that all of our things were loading into the trailer, and noticing all of the things we were leaving behind, it was quite invigorating and exciting. We both felt like a lot of weight was being lifted from our shoulders, like our roots had been sheltered from the sun for so long by a canopy of darkness and now we could feel the breeze.

And now we finally see the horizon of our next destination, and despite all the kicking and screaming against this change, I’ve come to the realization that it is a good thing. It’s still scary to think of dealing with a mortgage every month, but the opportunity for this new life has been presented. The only negativity that could come from it, would be from our resistance to change. Our wallets will not be as full, but that’s a sacrifice for this change and an opportunity to grow.

So I am grateful for the ways that have been opened for us, despite all of the changes we had to accept to get there.

The bank has put it on hold so I can’t spend it while they attempt to figure out where it came from. Still, no news isn’t bad news

I also decided if I do get to keep the money, that in addition to paying off my fathers medical bills and such, I will probably donate some of it. I mean if I’m given a big gift of money, it makes sense that I should share some of it. I think it would please the powers that be.

I have the inspections for the house set up for Thursday (septic, well, and termite). My bank is supposed to set up an appointment with me to sign some papers for the loan. I attempted to call the cable company to set up an appointment in advance for service, but they don’t schedule but 6 weeks in advance. I have to call next week to confirm a correct day.

I think all that is left is signing for the mortgage (and their own FHA inspection I imagine), setting up of electricity and cable (I’m still deciding whether to go with an electrical co-op or a big conglomerate around here), closing of the house at the end of September, and then the start of the move.

I have a few other small things too, like finding out who the trash service is in the area, but that’s not as important as the rest. I already have eco-paint samples I’m looking at for the living room and my bedroom.