How we got a $20,000 credit for our client on a new construction home!

For anyone thinking of buying or selling a home this year, it’s no secret that rates have skyrocketed and buying a house became more expensive.

If you bought an $800,000 home with 20% down in January 2022, your mortgage payment would have been $3,055. Today, that same loan would result in a payment of $4045. That’s a huge difference!

 

With such a large increase in such a short period of time, many would-be home buyers have been forced to sit on the sidelines, resulting in fewer home shoppers in the marketplace.  Those who are still in the market for a home are feeling the squeeze from all sides right now, so finding ways to lower that monthly payment can help ease the pain.

 

We recently had a buyer client at a standstill in negotiations with a seller because even though our client really wanted the property, (and I mean REALLY wanted it), they could only offer a certain amount and still have a comfortable monthly payment. That amount, of course, was less than what the seller was willing to accept.  During our conversations, the client commented, “If the rates were even close to what they were a few months ago, I would have no problem offering more money!”.

 

After crunching some numbers and talking to our lender, we came up with a way to be able to offer more money – but there was a catch. We would need the seller to agree to contribute $20,000 toward closing costs in order to be able to secure a rate buydown. There are a few options when it comes to buying the rate down, both temporary and permanent.

By using the rate buydown tool, we were able to come up with a solution that: 1.) netted the seller more money, 2.) allowed our client to obtain a comfortable monthly payment, and 3.) made the home within reach. Rate buydowns can offer long or short term savings depending on the product you choose. It is important to consider the upfront cost and discuss the details in depth with your lender to determine whether or not it’s the right option for you.