Compare financing paths
Match financing to the property’s current condition and your plan. A stabilized rental, a heavy renovation, and vacant land present different financing questions. Ask whether the lender funds the property as-is, reimburses repairs, or requires completed work before funding.
Compare total cost and execution: interest, points, lender fees, third-party costs, leverage, term, amortization, recourse, reserves, and prepayment provisions. A low advertised rate can be less attractive after fees or restrictive exit terms.
Consumer Loan Estimates provide a useful framework for comparing covered mortgages. Business-purpose investor loans may not use that form; request a written equivalent itemization rather than assuming all products share consumer disclosure requirements. Get the actual terms before relying on financing in an offer.
Loan A charges 10% interest and two points. Loan B charges 11% with no points. On $100,000 held six months, simple interest plus points is approximately $7,000 for A versus $5,500 for B, before other fees and payment differences.
Decision checklist
- Obtain quotes for an identical property and payoff timeline.
- Compare points, fees, rate, leverage, term, recourse, and exit restrictions.
- Reconcile cash required at closing and total cost by payoff.
Check your understanding
Which loan is cheaper in the six-month simple-interest example?
Show the answer
The 11% loan without points is approximately $5,500, versus $7,000 for the 10% loan with two points, before other costs.
Your next action
Request two written quotes for the same scenario. Compare total cost at your expected payoff date.
Sources & further reading
Sources support the referenced factual points. Examples and teaching explanations are original educational material. Read the editorial approach.