Buy Down Rates To Sell Your Home
Posted by eightyeightinc on January 23, 2008
You can offer terms to the buyer to make your home even more attractive. You can buy down their interest rate or give the buyer a very low starting rate- like 4%- for the first 3 years of their loan. There are many “tricks” you can use, if you want.
Offer a 4% start up rate on a 30 year amortized loan is a very good selling feature because…
- The normal interest rate is now over 6%, some close to 7%
- Not many sellers- if any- offer this.
- It costs you almost nothing to do it.
The loan officer has many ways to hide the costs- increase the sales price or put them into the closing costs.
For example, let’s say the buyer has a $150,000 mortgage at 7% with a monthly P&I (principal and interest) of $1,031.22. Now you offer the buyer the deal of a lifetime. Give the buyer a start rate of 5% which makes his monthly P&I payment $832.07.
The difference between 7% and 5% interest rate on a $150,000 mortgage is $199.15. If you offer this deal for one year it will cost you $2,398.80… for two years it will cost
$ 4,779.60… and for three years $ 7,169.40.
Now let’s say you are selling the house for the $175,000. Add the costs to the sales price and round the number up…
One year becomes 178,000
Two year becomes 180,000
Three year becomes 184,000
Lenders play these games all day long. If the costs are too high for you, go for a shorter time. If the buyer says the house is overpriced, tell the buyer you are paying for his low interest rate up front. The buyer cannot have both…low price and best interest rate.
Lenders can actually “throw the cost into the closing costs and the buyer never knows about it.
All of this is good for one thing…to make your house stand out!
For all your Salt Lake City, Utah Real Estate Needs
The Bronson Barber TEAM
801-712-1607
bronsonbarber@gmail.com
