Buydowns Can Make a Home Easier to Purchase or Sell
By: Elagene Trostle
November 10, 2009 -- For a Seller:
Realtors along with their Sellers can discover new ways to sell a home. Rather than reduce the sales price, it is better for a homebuyer to receive those same funds from the seller by buying down the interest rate on a home with those same funds. For example, for a $799,000 home sales price, the seller could reduce the home $47,940 or could pay 6% or $47,940 toward the purchaser's closing costs and buying their rate down. There would be $31,960 to buy the rate down which is equal to 4 points. The remainder would pay for closing costs. The purchaser has a much lower payment!!!!
For a Purchaser:
It is a much better savings for a homebuyer to use a buydown to lower their monthly payment than to have the price of the home reduced. For example, on a $799,000 sale price reduced by $31,940 = $773,432 with 20% down = $618,746 and $3744 per month P&I.
The 4% buydown would be $799,000 with 20% down payment = $639,200 with a 4% buydown, the rate would be 4.375% or $2980.42.
A huge savings of $866 per month in monthly payment plus there would be $ for closing costs!
