· 
Home Equity Loans
Financing, Loan Programs and Discount Points
Financing Methods
- Borrow money from lending group
- Take out a mortgage
- Seller financing might be an option
- lease-options
- Pay in cash
- Click “here” to receive Home Mortgage Options from a mortgage company near you.
Seller Financing
The advantages of a seller financing your home:
- Fast and easy
- Top dollar price
- Interest income
- Installment sale tax benefits
- No approval necessary from a lender
Candidates for seller financing:
- Homes advertised with seller financing
- Little or no mortgage balance on the home
- Vacant house
- Fixer houses
Loan Programs
There are many options for the first-time home buyer on finding the right loan. Here are a few:
- Federal Housing Administration
- Veteran’s Affairs
- Federal Mortgage Agencies
- Banks and Thrifts
Points or Discount Points
“Points” are par of your closing costs and not considered loan fees. Points are an optional feature of the loan that allows the borrower o buy the interest rate up or down. Lenders typically will require the borrower to pay more points on a lower interest rate.
This chart below is an example of the points you could pay: (based on a $100,000 loan amount)
Rate |
Points |
APR |
Monthly |
| 6.500% | 2.750% | 6.928% | $632 |
| 6.625% | 2.250% | 7.005% | $640 |
| 6.750% | 1.750% | 7.081% | $649 |
| 6.875% | 1.125% | 7.144% | $657 |
| 7.000% | 0.750% | 7.232% | $665 |
| 7.125% | 0.375% | 7.320% | $674 |
| 7.250% | 0.000% | 7.408% | $682 |
Analyzing the “Points” > Here we go!
- Do a break-even analysis before you decided whether to pay points.
- You will usually acquire a lower monthly interest rate by paying points, but it is up to you to determine whether it makes economic sense.
- For example: $100,000 to start with – at 7.25% loan for 30years has a monthly payment of $682. If you pay 1.75 points - $1750 – your rate would be 6.75% and your monthly payment would be $649. This is a monthly savings of $33. You are paying $1750 to save $33 per month. It will take roughly 4 ½ years to recoup your investment or “break-even”.
- Pay zero points or as close as possible to zero points:
- You are going to move in 3-4 years
- You are going to refinance in a couple of years
- Your preferred mortgage is an ARM (adjustable rate mortgage)
- Pay 1 or more points:
- Staying put for more than 5 years
- Renting out property after you move
- Do not plan on refinancing
- Points are Tax Deductible
- You might want to consult your tax advisor
- Now that you are armed with all the appropriate information, click “here” to fill out a brief form and receive up to 4 free mortgage quotes from mortgage representatives near you.
