Friday, December 7, 2007

Loan Points- Let the seller pay them

Here is a financial win/win that so few people know about. Realtors and sellers are frustrated because their listings are remaining stagnant. Home sales in many parts of the country are not moving. Buyers are frustrated because loan qualification has become more difficult and they need more money to close the transaction.

Many Realtors, lenders, and consumers do not know that the seller can pay the loan points and the buyer can write them off. Why is this so important? In most areas it is now a Buyers market and the Seller can entice the sale of their home by offering to pay the loan points. The buyer gets the write off and obtains a lower interest rate. Because the rate is lower, the buyer qualifies more easily for the loan.

If you are selling, consider this as a cost of doing business. Once you pay the points as a seller you also lower the gain on your home potentially reducing your capital gain tax liability. If you are buying, get the best interest rate by having the seller pay your points.

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Doug Jones has been a lender since 1968.