Financing Options

[Redwolf8812]

Looking to purchase 225 points at BLT this April. What's the general consensus regarding financing? Through Disney, or refi/home equity loan?

 

[Sandisw]

I think it is really a personal choice. You will certainly save money going thrugh a HELOC but going through Disney is really easy!!!

We bought in last year and put the purchase on our Disney Visa and got 6 months, 0% interest. It was only 180 points--one 130 point add on (April) and then one 50 point add on (June) We knew we would have it all to pay down by the end of the summer, but this allowed us to spread things out. I just payed it off in January!

With Disney, the rate is higher, but it doesn't show up on your credit report and you are not putting your home at risk by doing that. We initially signed up for this, just so that we could take time to search for a better option. Some things came through for us, and that is why we were able to simply do the Disney Visa, but had they not, I was all set to go with Disney. Even given the higher rate, I would have still saved money in the long run compared to what I have been paying to stay at CR for years.

Good luck!

 

[Greysword]

We used Disney for the convenience and the reasons Sandi mentioned above.

 

[Slakk]

Looking to purchase 225 points at BLT this April. What's the general consensus regarding financing? Through Disney, or refi/home equity loan?

Lots of people tout HELOC and refi but make sure to run the numbers

18,000 at 10% over ten years

APR: 10.0000 %
Monthly Payment: $237.87
Total Payment: $28,544.56
Total Interest: $10,544.56

18,000 over 30 years

APR: 5.5000 %
Monthly Payment: $102.20
Total Payment: $36,792.73
Total Interest: $18,792.73

 

[sweetdana]

I work in the mortgage field, a few add ons.

1) HELOC are far and few in between now. If you find a lender to do one, likely it will only go up to 80% LTV now and require flawless credit in a non-declining market area.

2) A small HELOC (less than 50K ) you will usually pay closing costs. State dependent, but you need to put this in your APR. If you pay 1,500$ or 2,000$ in closing costs and keep it 5 years average that into it. You may be able to get nearly zero costs with a draw of over 100K, and even sometimes a prepayment penalty will lower them. (You can see draw backs on that.) The shorter time you actually keep it, the less costs make sense.

3) All HELOCs are tied to prime which is tied to Fed Funs Rate meaning it is variable and can change monthly and caps if they are there are in the 14% - 22% range. (state specific).

4) There are fixed second mortgages same credit/loan to value as Helocs. ALso if your 1st mortgage is over 5.75$ redoing your 1st, may still work better as rates are super low right now.

If you plan on paying it off in less than 3-4 years I would base decision nearly all based on APR. Look at the APRS, not the rates by themselves. (The actual cost of loan.) If you will be financing more than say 4 or 5 years, consult a financial adviser or CPA based on terms, rates, fixed, variable to see which meets your individual needs.

I am not sure this Disboard is the best place for financing advice. I really think contacting someone who knows your profile is ideal. Welcome Home !!!

 

[Redwolf8812]

Thanks for the info everyone! We've been considering this for years and plan on finally signing papers next month. Will keep you posted!

 

[Crystal_27]

Also, something to consider (either way) is that your interest is usually tax deductible.

 

[staceymay00]

We decided for the moment to buy only what we could pay cash for, but we do have a HELOC that would have been cheaper than a WDW loan (of course you are putting your house on the line when you use it, that is something to think carefully about). We opened ours last year to help with a necessary home improvement, and were able to get one in spite of the housing/mortgage troubles (we have high credit scores and our house is worth twice what we owe, though - they are more difficult to get than they used to be).

Anyway, our HELOC is very flexible. Right now we are using the variable option (5.25% interest right now) but when rates start to go up we can switch our balance to a fixed rate option that would be 2-3 points higher than the variable interest rate. That rate would still be less than Disney's and the interest would be deductible. WDW interest rates are quite high and I personally would only finance through them if I knew we could pay it off in a few years. Even with the preferred 10.75% rate the interest really adds up over 5-10 years. That is just me, others feel differently so you need to run the numbers and decide how much interest cost is ok with you.

 

[LuvToPlayDisney]

We just made our purchase and found the a home equity loan rate 5.4% was much better than what was offered through on-line financing or DVC.