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what does it mean to buy down points? and why can't the refigerator stay for FHA?

I thought i understood the buy down points but now I am confused again, soon as i leave the lender's office i start forgetting. I need a 5th grade explanation that i can remember.  also...we can't ask for the fridge because it's FHA loan, that didn't make sense either- she explained and i felt like I understood but now I don't.  she's so smart and so patient, but I'm embarrased to keep asking stuff like this.  help?
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February 07 2011 - Oklahoma City
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Answers (10)

Best Answer

Basically if you think there is any chance that you will move out of this home in the next 4 years it might not be worth it. For example if you spend $4,000 for your points to get a lower rate and your payment will now be $90 less a month this means that you will save $1,080 a year. Great right? Well divide the $4,000 by $1,080 and you get 3.7. This means that you will have to live in your home without refinancing for at least 3.7 year to get your money back in savings. Hope this helps, let me know if you have any other questions.

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February 08 2011
realize that this is an OLD post.
but I just ran across a similar thing lately.  and wonder if it's the same thing.there was no issue with the refigerator staying as long as it was written in the contract.  the buyer didn't ask for the fridge in the contract but a weekor two before closing asked about buying it from the seller.  this was a concern because it is officially a "side" deal and the seller's agent pointed out with great concern.  it was too late in the game to hassle with changing the contract to increase the price for the fridge and do addendums etc.

so it was a lesson learned-ask for it up front and keep all agreements in the contract-no side agreements.   (actually the seller said no anyway )
perhaps that was your situation??
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September 25 2011
I see we have several great answers on buying down points.  Zillow has an incredible realtor network that you can depend on to give out great answers.  
On the refrigerator question, it is a negotiable item in a contract and is considered to be personal property.  In Texas we use a form that is separate from our contract called a Non-Realty Addendum to convey non attached items like refrigerators.  Regardless of which state you will be purchasing a home in,  Always make sure that you get everything in writing.  I would suggest that you ask your agent again why the refrigerator cannot be included on a contract for an FHA loan.  You may have misunderstood her reasoning.  A refrigerator can be conveyed from the seller to the buyer in a FHA loan.

Trust me on this and always feel free to ask questions of your realtor if you are unsure about the answers.  It is our job to make sure you understand every detail of your transaction and we are more than happy to explain.
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September 21 2011
Profile picture for PukonYukon
the fridge was something about an exchange of personal property that was not allowed- because it was fha loan- seems to be only one person having a hang up with it.  so i dont' really understand that one.  they are gonna have a garage sale and I'm gonna buy it.  i think that covers us. - it is a transaction totally independent of the contract now. 
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February 08 2011
Very simply put you pay extra money up front to get a lower payment.

As far as the fridge goes. You can not have it with a FHA loan if it has mold in it. Ha! nobody thought of that answer. Really though whether the fridge is there or not makes no difference to the FHA Appraiser as it is not required to get an FHA loan.
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February 07 2011

This may help. It seems unusual that an FHA loan wouldn't want a refrigerator included, but apparantly it's not required.

I have had a seller have to remove a second refrigerator from a property that had a second kitchen on the second floor in order to get FHA approval.

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February 07 2011

... oops, I didn't quite complete the answer.  I have never been told by any lender that FHA won't allow the seller to leave the fridge for the buyer.  In fact, I have had sellers leave the fridge and I have had buyers request and recieve fridges from sellers in an FHA loan. 

However, sometimes an appraiser may take of the value of the fridge of the appraised price of the home... Although, it has never happened in any of my contract.

Good Luck!

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February 07 2011

How much (more) money will it cost you to "buy down" your interest?  Put that amount to the side.  Now, ask for an amoritization table (one with the "buy down" figure and one with the normal loan figure), it will show you how much interest you pay toward your loan with each payment.  You will be able to see at what payment you actually begin saving money.  If you plan on being in the house after that point, and you have the money to put towards a buy down, maybe you should do it.  However, if for any reason, you think you may want to sell or might have to sell before than, DON'T do the buy down.  As others below have suggesed, you are basically paying upfront intersest.  If this doesn't make sense, ask your lender to sit down with you and show you at what date you will have started saving money.  It's the best way to understand. 

As far as the fridge, I've NEVER had that come up before... I would definietly question this.

Good Luck!

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February 07 2011
There is absolutely no reason that you cannot ask for the Refrigerator.  Of course you can (and should).  FHA does not require a fridge to be present, but if there is one all the better.
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February 07 2011
The bank is going to get their interest money one way or another.  You can either pay it all over the term of the mortgage at the standard rate your you can "buy down points".  You are paying interest money up front for a lower rate.  They are betting that you won't stay there for many years and finish out the mortgage.  With the points buy down system they don't have to wait until you pay off the house to get all of their money.  You are basically paying interest up front.  I wouldn't do it unless you are planning on staying there without refinancing for a long time.  Best wishes.
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February 07 2011
 
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