424,363
Seller is going to pay a huge upfront cost. They hold the sales price but kick back one or two percent of the total loan cost for buyer to get a tiny rate reduction. Rather than show you what the buyer saves for temporary period of time which John answered well, let's talk about when a seller might do this? Seller has gains over the capital gains rates. Say seller is single the individual doesn't have to pay on the first $250000. However if seller owned for a long period of time a primary residence and they aren't exchanging - basis of house + improvements + $250000= the amount not taxed. If the "overage" would just go to taxes and they want to get a deal closed ASAP seller might consider giving the buyer $10000- $19000 on a $640000 loan. There are caps on what the seller can give, depending on the loan type the buyer chooses -varies by loan to value and loan type. When the credit starts to exceed $10000 I find the seller balks even though it offsets what they pay to the taxman, the dollar amount sounds too big. What other situations work? - seller's property not getting much action, is unique, offers candy to buyers?
Sellers who don't have much equity probably not candidates...
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John Juarez
Fremont, CA
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Eileen Burns 954.483.3912
Fort Lauderdale, FL
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Greg Large
Grove City, OH
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Bruce Walter
West Lafayette, IN
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Diana Zaccaro Broker A...
Cocoa Beach, FL
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Wanda Kubat-Nerdin - W...
St. George, UT
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Fred Griffin Florida R...
Tallahassee, FL
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Kathleen Daniels, Prob...
San Jose, CA
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Candice A. Donofrio
Fort Mohave, AZ
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Richie Alan Naggar
Riverside, CA
1,093,855
Hi Richie Alan Naggar --- what's happening in a buy down is the seller is basically paying the payment reduction cost for the buyer in a lump sum, then the lender distributes that lump sum over the course of months. It's tedious (our loan origination software does the math for us), but you can figure it out as follows, using a 2/1 buydown as an example:
2/1 buydown with a 7% rate on a $500,000 loan
7% payment = $3326/month
Year 1 payment, 2% below note rate (so 5%) - $2684/month = $7704 payment reduction for year one
Year 2 payment 1% below note rate (6%) - $2997/month = $3948 payment reduction in year 2
Total cost to seller for the 2 years of payment reductions = $11,652
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John Juarez
Fremont, CA
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Lyn Sims
Schaumburg, IL
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Greg Large
Grove City, OH
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Bruce Walter
West Lafayette, IN
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Wanda Kubat-Nerdin - W...
St. George, UT
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Georgie Hunter R(S) 58089
Haiku, HI
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Fred Griffin Florida R...
Tallahassee, FL
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Richie Alan Naggar
Riverside, CA
1,621,747
Paralysis of Analysis of Rates: today's rates are not high,
they are actually lower since January
and the rates are simply today's rates.
They are only "high" when you time travel to compare them.
If they jump in a month, understandable, but looking back beyond a quarter or more is pointless. You pre-approve in today's rates, not yesterday's.
- Jan 30-year fixed mortgage rates: 6.500%, down from 6.625%
- Feb 30-year fixed mortgage rates: 6.875%
- Mar 30-year fixed mortgage rates: 6.54%
- April 30-year fixed mortgage rates: 6.34%
- May 30-year fixed mortgage rates: 6.43%
Comparing them to 2 years ago at 3%? What in real estate is relevant from 2 years ago today? Nothing but stats and data for trends/cycles.
Buyers living in the nostalgia of yesterday's rates are missing out on today's opportunities. Our clients need to live in the present, the past is done with them. Today's rates are not high, they are just today's rates.
12.9% was high, but that was 1989's rate for a 20 year old young man buying his first house, but I paid it to be a homeowner and I have ZERO regrets for jumping in when I did. Today's rates, are just today's rates.
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John Juarez
Fremont, CA
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Eileen Burns 954.483.3912
Fort Lauderdale, FL
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Karen Climer
Orlando, FL
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Richie Alan Naggar
Riverside, CA
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Greg Large
Grove City, OH
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Thomas J. Nelson, REAL...
La Jolla, CA
3,432,801
I would listen to Caroline Gerardo - she really knows her stuff!
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John Juarez
Fremont, CA
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Greg Large
Grove City, OH
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Diana Zaccaro Broker A...
Cocoa Beach, FL
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Wanda Kubat-Nerdin - W...
St. George, UT
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Kathleen Daniels, Prob...
San Jose, CA
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Richie Alan Naggar
Riverside, CA
1,539,804
I have had some lenders mention this to me, but I've yet to have a buyer bring it up or a seller that would even consider it. Sorry I can't be of more help to you on this.
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John Juarez
Fremont, CA
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Lyn Sims
Schaumburg, IL
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Wanda Kubat-Nerdin - W...
St. George, UT
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Kathleen Daniels, Prob...
San Jose, CA
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Peter Mohylsky,
Miramar Beach, FL
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Richie Alan Naggar
Riverside, CA
3,214,209
There's still limits on how much a seller can pay so how much can a rate be bought down by a seller?
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John Juarez
Fremont, CA
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Eileen Burns 954.483.3912
Fort Lauderdale, FL
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Wanda Kubat-Nerdin - W...
St. George, UT
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Kathleen Daniels, Prob...
San Jose, CA
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Don Baker
Eatonton, GA
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Richie Alan Naggar
Riverside, CA
1,448,633
A lender, perhaps here in the Rain, is the best source for a quality answer to your question, Richie Alan Naggar
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Eileen Burns 954.483.3912
Fort Lauderdale, FL
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Diana Zaccaro Broker A...
Cocoa Beach, FL
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Wanda Kubat-Nerdin - W...
St. George, UT
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Kathleen Daniels, Prob...
San Jose, CA
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Richie Alan Naggar
Riverside, CA
8,162,506
Home sellers in our area do not need to make any special offers.
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John Juarez
Fremont, CA
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Diana Zaccaro Broker A...
Cocoa Beach, FL
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Wanda Kubat-Nerdin - W...
St. George, UT
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Richie Alan Naggar
Riverside, CA
1,294,597
Not really a good idea for either buyer or seller
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John Juarez
Fremont, CA
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Wanda Kubat-Nerdin - W...
St. George, UT
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Richie Alan Naggar
Riverside, CA
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Kathleen Daniels, Prob...
San Jose, CA
1,870,653
Isn't this just like an old VA deal? Sellers help so buyers can get in.
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John Juarez
Fremont, CA
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Eileen Burns 954.483.3912
Fort Lauderdale, FL
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Wanda Kubat-Nerdin - W...
St. George, UT
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Richie Alan Naggar
Riverside, CA
1,102,470
I have not heard of ANY seller offering or even willing to buy down the buyer's rate . . . Caroline Gerardo has chimed in, that is who I would look to for the education.
My residential gals say 'sellers would rather sit than do that' . . .
RE remains local and regional!
Having said all that . . . we are usually 6-12 months behind LA, LV and Phx market trends . . .
I've been telling pals wait a few months before buying a house . . . you might see some savings.
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John Juarez
Fremont, CA
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Wanda Kubat-Nerdin - W...
St. George, UT
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Lyn Sims
Schaumburg, IL
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Richie Alan Naggar
Riverside, CA
416,394
It's pretty expensive to buy down 30 year rates. Don't know if there's enough to make a real difference in sales.
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John Juarez
Fremont, CA
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Wanda Kubat-Nerdin - W...
St. George, UT
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Kathleen Daniels, Prob...
San Jose, CA
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Richie Alan Naggar
Riverside, CA
6,698,702
Seems funny that buyers agents request that sellers purchase an interest buydown, yet it make me wonder, if this is such a good thing, why dont they suggest that their buyers do this?
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Bob Crane
Stevens Point, WI
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Richie Alan Naggar
Riverside, CA
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John Juarez
Fremont, CA
942,976
The seller can give a set amount or get with a lender to offer a percentage. I've had clients offer a dollar amount to use toward a buydown and they can choose how they want to use it.
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John Juarez
Fremont, CA
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Richie Alan Naggar
Riverside, CA
923,184
Do you mean paying a fee to bring down your borrowing rate? If so, it usually doesn't make sense because you would need to hold that mortgage for a long time to "work off" the upfront fee. Just crunch the numbers and you'll see. It's better to accept a higher rate for a longer period to lower your monthly payments until you can refinance in a better rate environment.
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Wanda Kubat-Nerdin - W...
St. George, UT
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Richie Alan Naggar
Riverside, CA
29,181
2-1 buybown cost is normally in the range of 1.7% - 1.8% of the loan amount
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Richie Alan Naggar
Riverside, CA