WHAT IS POINTS, PITI ETC?

Question

HI

I have numbers to analyze, my property is value in $205,000, I already paid it off and rent it for $1400.

I want to cash out  to do a new investment or BRRRR and I got this lender who offers me this for 30 years:

$150,001.00(LOAN AMOUNT)///$205,000.00 (APPRAISED VALUE)///3.500%(RATE)///3.865% (APR)///2.942(POINTS)///

$673.57 (MONTHLY P&I)///$840.24(PITI)///$7,596.34 (LOAN FEES)/// $1302 (PREPAIDS)///$141,102.66 (CASH TO CLOSE)

Do you think is it a good deal or not?

what can I negotiate?

PD.

Considering that my credit 700 approx but I can not get into the banking system easily.

Raul Vasquez · Answer

@Bob Norton I really appreciate your help.

Thank you!

Bob Norton · Answer

@Raul Vasquez Check out other lenders first to compare offers.  Don't let them run your credit, until you are ready to choose a lender, to keep the credit pulls from lowering your score.

Points are pre-paid interest and are usually offered to lower the interest rate, and/or for the mortgage company to earn fees for the refinance.  In your example above, you would be paying around $4,400 in points to get this loan.

PITI stands for principal, interest, taxes and insurance.  The monthly loan payment of $840.24 is broken down into $673.57 (fixed payment for principal and interest) and $166.67 for escrow to pay the annual insurance and property taxes.  This amount will increase over time as your insurance and property taxes increase.  Since your loan above is only a 73% loan-to-value, you should not have to escrow your insurance and property taxes.  However, if you choose not to escrow your those costs, you will still need to set aside the funds in a reserve account to make sure they are available when the bills come due.

Hope this helps.