Tulsa Mortgage : Podcast 148
This is Steve Currington dotcom in the Steven Tyler show up Oiseau number 1:48.
Steve Steve Tyler.
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Tulsa Mortgage You’re listening to the Steven Tyler show. Tim Redmond walked in here. I left love notes for Tim Redmond. You see him Sam all over the place yesterday says Tim revenants the man.
So hey we’re the drivetime studios and Jinx America. Today we’re talking about discount points or discount points Tyler. They are what what what are discount points the points that you pay the other discount points that’s what they are. What are discount what’s their discount points.
Everybody asks this like I don’t want pain points I don’t want to pay discount points. I’m not a fan of them either. I would recommend not taking discount points ever. Let me tell you a little story. I think maybe I have told this before. Back in the day they were trying to stimulate the housing market and they said hey if you buy a house.
Tulsa Mortgage Or get that story don’t go. If you buy a house you get it now or actually it started as a $7500 tax credit just for buying a house. By House. Federal government we file your taxes. You said if they increased the deployed eight thousand eight. I don’t know. It’s a long time ago I’ve slept since I. Saw this really nice couple really cool and they were like. Well we’re going to put our down payment down. And we know we’re going to get that tax credit. And so we just want to get a lower rate. So we want to know if we because we have the money now. We want to take that 80 $500 tax credit. And use it to get a lower rate. Right. And I’m not. OK.
I wouldn’t do that if I was you. Well why we could. All right. So I went through the whole process with them and showed them. Yeah. Like I don’t know there was another set there four percent pay no points and if they.
If they paid. 80 500 bucks they could get like three were just making up numbers. But it was something like that. So literally there are about 180000. So it literally saved them Tony seven bucks a month. I don’t know. It was something ridiculous. I mean it totally made no sense at all. But they’re like extra money. So who cares.
Tulsa Mortgage It’s free money right. OK it is free money. So I did the math. They would have to stay in that house. For 13 years. Some of the. Just to get to Brakey based on that it’s once again. And then on year number 13. They would start saving $27 a month. That’s how it works. So. So I says to him hey I don’t think this is a good idea because most people now you guys are first time buyers.
You’re married you’re going to have a child soon. I know how it goes. Graduate college get married some you get married and you graduate college you know and then you buy a house. Then you have baby with a beautiful wife and then you have another baby and then you go oh my gosh this house is so tiny these children are driving me nuts when it a bigger house.
And that usually happens before 13 years. Fact. Statistics tell you that it’s like five to seven years. I mean it’s really like short. So.
Tulsa Mortgage What happens if you spend eighty five hundred dollars on on discount points and then you sell your house in five years. You’re giving away money you’re giving away money because all you did was temporarily. Lower your payment by a little amount by giving a whole bunch of cash betting on the fact that you’re going to be there long enough to make it up. And if you sell your house if the break even point is 13 years and you sell your house in five that’s a lot of money. I mean that’s probably like you know I don’t know 80 percent of the money that you were asked but these spent on discount points now. Sure your payments 27 bucks lower. But why not take that 80 500 bucks and put it back. And then use that 27 bucks to make that payment or invest. I mean do something with it. I mean give it to me I’ll put on Black Jack. You know all on Black Jack. I’ll put on black. They get it. I’ll play blackjack. Take your chances I’ll go to the casino. I’ll do something. By the way. I’m going to say the date. But somebody was in town. Somebody was in town recently from TLC. If you’re watching on totaler knew somebody was in Tulsa over here at the river spirit and want a bunch of money at the slot machine.
I’m not saying who but somebody travels from Colorado Springs to Tulsa. Puts ten bucks in the slot machine wins a couple of thousand bucks maybe maybe more. I don’t know. So that would be a better bet though. Then I’d put it so here’s the funny part. Here’s the real funny part. So they pay discount points that were just kept points or so they paid to get a lower rate.
Two years later I did a new art form nice two years do two years and you know I didn’t shove it in their face. I wasn’t like gosh you guys are idiots. Your sister has stayed there for 11 more years. No. I get paid tiler. On commission. Well I close loans. So I was like Congratulations. The family has grown. Your children are beautiful.
Yes I’ll do another loan for you. This time it was for 280000. What you did there alone.
And in the back of the mind my mind I was thinking.
Tulsa Mortgage What it was though. I was right. You know I really want to be right. I was not happy about being right in that case. Now I think in their mind they never really thought.
That they lost any money you know. Yeah. They didn’t think that. I mean all those free money that they got from the government the government but not good and not my opinion. Not a good idea. So what you want to do if you don’t understand this discount points are.
Google it. And then be real careful. OK what I say by Google it. Be real careful. There’s a lot of information out there. Any Tom Dick or Harry that wants to like write an article and post it up on their website don’t you. Whether it be valid or not can do that. So just be careful about what you read. We when we first heard our podcast we got a book called mortgage 101 and we were using the book you know like the chapters and subchapters because it was like a really basic knowledge of mortgage to kind of do some of our topic remember that. Yeah. And what was the one thing that we ran into a bunch was that there was a whole lot of misinformation in this book is wrong. There was just a bunch of stuff that was just not right. That was in this book that either it was out of date. Or it was just flat out wrong. It was like some dude’s opinion about something because we had read that but you know we read the book to just kind of see what was in there. So some of the things that have like a story about closing costs or whatever. And so just be careful if you’re searching online on what are discount points or whatever and find a good resource like get qualified dot.com or TLC dot com and you know you’re listening right now of the Steven Tyler show. I don’t know if there’s a better mortgage podcast out there where you could learn things. I’m there is one at all.
Tulsa Mortgage I’m I’m glad you found us if you’re listening or watching because there may not be another mortgage podcast we might be the only mortgage broadcasters in the world.
We know you may have Urmi. I had a person yesterday ask me about his counterpoints. Oh they’re like oh Will the sellers get to pay closing costs going just get them to pay points because we really just need to lower that. And I’m like here’s the deal. I can pay how much you want. I mean you know to a certain extent up to 6 percent closing costs yada yada yada. But I did the math for him. I was like you could go down a full percent to save a hundred bucks one full percent say this guy Auerbach’s. But the cost to do that was last straw.
Nomic call us yeah. Hey But that brings up a good point because you know Brian our president CEO who’s in Colorado Springs. Uses this this is like how he does stuff is if the seller is paying closing costs if they’re already paying closing costs and let’s say the sellers paying 7000 or closing costs and you’re your actual closing costs are only fifty five hundred.
Tulsa Mortgage Pay the discount point get the lower rate. Because it’s wasted money. Because like the sellers or no offense sellers out there you already agreed to pay these costs. And just because their insurance they got was a thousand bucks cheaper per year than was estimated and now they have a overage or closing costs that are not using a lot of sellers think well maybe they’ll just be less. No they won’t. They’re not a huge loss. They’re going to use all seven thousand ninety nine point nine percent the time.
And if you’re using free money from a seller if that’s what’s happening then absolutely I take that. Fifteen hundred bucks and get a lower rate because they already agreed to pay it. They’re paying 7000. Your costs are only fifty five hundred. So now. Maybe maybe it is not smart to take 1200 bucks and lower your rate by any. But it’s free money basically because the sellers are to agree to pay it or or the other thing you need to do is go back to the seller and renegotiate the contract because that would be the next move to do is I want to reduce the contract price by fifteen hundred and only have you pay 55. That’s another way to do it. But most of the time if they’re paying it and it’s there that’s how they sell it is you pay closing costs and I’m going to get a lower rate because your pain.
Tulsa Mortgage Broadcasting live from that koala’s studios in Tulsa Oklahoma. You’re listening to the Steven Tyler show