Mortgage vs Rent…how does that work?

by | Jun 29, 2015 | Real Estate | 0 comments

Upcoming Free (& non-promotional) Home Buyer Classes:

Saturday, July 11th , from 9am-12pm
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Tuesday night, July 14 , from 5pm-8pm
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

….we also have home seller classes available too.

…if these dates/times don’t work for you, we have others.  Check out the website for more class dates, times, and locations.  PLEASE always check  the web  ;  for any changes regarding the classes!

Remember…with reservation…we will throw in lunch, or dinner!  😀
Happy Monday morning!

Thank you SO MUCH to everyone who came out and joined us at the spring client appreciation event on Saturday.  Inside Out was a very darling movie, but I LOVED the Pixar short before the movie.  Haven’t seen it?  Youtube Pixar’s Lava you….brought tears to my eyes.  Yes, I am a sappy soul…no shame here!  LOL  I love the client appreciation events…I love seeing everyone, and catching up a bit.  What is really funny is that people come to these and see people they know!  😀  Ever hear of “Six Degrees of Kevin Bacon”?  Well, around here it is “Six Degrees of Tracie DeMars”!  LOL    Just a heads up….our next Client Appreciation Event will be on Saturday, December 19, for the new Star Wars Movie!!  Yep, that is opening Saturday, and WE HAVE IT!!  I have to admit…Chris Berg (503-320-0925 & & I are stupid excited about it!  So again, thank you for choosing either Chris or me (or both of us) to help you with your next home adventure….whether you are buying, selling, or just refinancing….we are so happy & grateful that you chose us to help you!  🙂  Now, let’s get to this weeks real estate education….

So, this week I have wrote up a couple of offers, and during the offer process I like to talk with my clients about when they want to close.  Closing is when you get keys…not when you sign.  In Washington, you typically close (=keys) about 24-36 hours after you sign.  This, of course, doesn’t include the weekends.  Title and the courthouse is closed on weekends so nothing happens then.   Why does closing dates matter?  Well….because your mortgage payment differs a bit from how you pay rent.  Also, most buyers have leases to consider.  This usually comes up so t  his week I am going to talk about Mortgage vs Rent and how it shakes out because they are paid differently.  What do I mean?  Well….

So let’s break down mortgage vs rent…..

When you pay your July rent, you pay to live there for the month of July…from the 1st to the 31st.  When I pay my July mortgage, I am actually paying for the month of June.  Nope…not kidding, I am really am, and you’re like, “what?  how?”  🙂  Well, rent is paid ahead of time, but for mortgage, you can’t be charged for what you haven’t accrued, so when you pay your mortgage, you are actually paying for the month just past.  Mortgage is technically due on the first, but it isn’t considered late until the 15th of the month, and which point you will be charged a late fee which is usually about 5% of your monthly payment.  Did you know that if you pay your mortgage at the 1st of the month though you are actually paying the most in interest?  I was told this from someone I know who works at a bank….that ‘supposedly’ if you pay at the the last day of the month (for example: on July 31st for June) then you are actually paying the most in principal, and the least in interest that you can in your regular payment.  Interesting…

Why is this important at closing?  
This is important knowledge when you are writing up an offer because it has to do with how much your closing costs are going to be.  Some examples….

So, let’s stay you are in the process of getting pre-approved, or you are looking at homes right now.  If you were to close on your new home on August 25th, then you will be paying for 6 days of interest as part of your closing costs for the rest of August, and your first payment is due October 1st for the month of September.

If you were to close on your home August 10th, then you will be paying for 21 days of interest as part of your closing costs for the rest of August, but your first payment is due (still) October 1st for the month of September.  Does that make sense?

If you close ANY day in August…whether the 1st or the 31st….your first mortgage payment is due October 1st.  If you close earlier in the month then your closing costs/downpayment may be a bit higher as you are including that months interest as part of that downpayment….but your first payment is further away.  Some people like this as it gives time to put a bit of money aside for savings.

If you close later in the month, you have less to pay for interest as part of your closing costs/downpayment, but your mortgage payment will be due sooner.  Some people like this because it is just going from one rent payment, to your first mortgage payment, and it is a smooth transition.

Whether you choose to close sooner, or later, is up to you, and it is good to talk with your lender about how much that additional interest may cost you in your closing costs/downpayment.  Usually when doing your paperwork, and your pre-approval, your lender will figure your fees based on as if you are closing on the 15th since…number wise…that is a safe bet and won’t affect you too much either way if you close at the beginning, or at the end.

When writing up an offer this is always something I spend some time on when talking about when you might like to close as it isn’t something that people realize….and no one ever explains it.  If you have any questions about this or if you would like me to help you with your home buying adventure, please call or email me and I will be glad to help!!

Information is power, and I hope that I am able to help you.  Good luck, and as always…May the odds be ever in your favor out there….  If you are looking for a real estate agent, I would love to be able to help you.  
As always….this is just a quick overview…. please remember that your agent, and your lender work for YOU.  You drive the bus…we are merely GPS to help you get to your goals.  Like the classes, this weekly blog email is to help you with your homebuying adventure.  The goal is to be informative and non-promotional.  🙂  We are, however, hoping you will call and want us to help with your adventure.

If you have any questions about this, or something you have heard…or if you would like me to help you with your homebuying adventure, please call, email,   text, or facebook me anytime.  I am, as always, happy to help!

Thank you again for your business and your referrals!!  …and thank you for referring these classes to your friends, family, and co-workers.

.  ..disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings…

Next Week:      Websites to find homes, and what status’s mean
Last Week:  Homebuying Do’s & Don’ts             

Have a great day, and I will talk to you soon,

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA

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