The Washington State Housing Finance Commission has recently offered more pricing options with their Home Advantage first mortgage program. Originally, all Home Advantage products were priced with 1 point. One point equals 1 percent of the loan amount and is paid at closing. This closing cost cuts into the down payment assistance that many home buyers are hoping to utilize when they are using the Home Advantage Mortgage program.
Home Advantage now has a “zero points” option which helps to reduce closing cost. Pricing the loan with zero points does mean that the rate is slightly higher, however, the payment difference is probably going to be slight. Often times 1 point only brings the interest rate down by 0.125% to 0.25% in rate.
For example, based on today’s pricing (July 31, 2014 at 12:26 pm), WSHFC is offering the following pricing:
- 5.000% priced with 1 point (APR 5.341%).
- 5.250% priced with 0 points (APR 5.505%).
Based on a sales price of $430,000 and a loan amount of $416,762 let’s compare the two pricing options.
- 5.000% has a principal and interest payment of $2,237.27 with 1 point (which equals $4,167)
- 5.250% has a principal and interest payment of $2,301.38 with zero points.
The difference in payment between these two scenarios is $64.11. The cost to have a payment $64.11 lower is $4,167. It would take 65 months to break even on this cost when comparing these two programs (4167 divided by 64.11).
Sometimes the difference in payment can make the difference between qualifying or not qualifying for a mortgage. So please do review your scenario and pricing options with your locally licensed mortgage originator.
In order to qualify for one of the WSHFC mortgage programs, home buyers need to attend a WSHFC sponsored class. Here’s a current list of classes that I am teaching.
If you are interested in down payment assistance, or buying a home located anywhere in Washington state, I’m happy to help you! Click here if you would like me to provide you with a mortgage rate quote.