Did you know that over 18% of all home listings had a price drop in August?
When homebuying costs are high, many home buyers’ first move is to look for a lower priced home or submit an offer below listing price to save some money.
However, when you really dive into the numbers, asking for seller credits instead of a price reduction and using those funds to lower the interest rate for the first few years of the buyer’s mortgage has a MUCH larger impact on improving home affordability and reducing their monthly mortgage payment.
Take a look at the example below showing what the savings could look like between a price-reduction strategy and a seller-paid rate buydown strategy today:
The seller-paid rate buydown strategy is the clear winner here. Not only does it benefit the buyer by decreasing the rate and monthly payment, but it also helps the seller keep some money in their pocket compared to a price reduction.
We are BIG fans of this strategy and its potential to save your clients money and help them make a new mortgage payment more manageable in this market!
If you have clients who are struggling to get their offers accepted or qualify for financing, I’d love to connect and show you how to use a seller-paid rate buydown strategy to close the deal.
All figures and rates shown in the examples above are for educational purposes only and do not reflect an official mortgage loan offer. Hypothetical interest rate includes 1.0 discount point (1% of the loan amount) paid at closing. Hypothetical APR reflects the effective cost of the loan on a yearly basis, taking into account such items as interest, most closing costs, discount points and loan origination fees.
All figures shown in the examples above are subject to change and may be subject to pricing add-ons related to property type, occupancy type, loan amount, loan-to-value ratio, credit score, refinance with cash out and other variables. Estimated cash needed to close may fluctuate based on individual borrowers’ circumstances and are subject to a full Underwriting review of supporting documentation.
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