Saturday Strategy

Mortgage FAQ's, did you knows and much more...

Is it better to reduce the price or apply money to a Temporary Seller Buydown option?

With rates and home prices at all time highs, I wanted to provide you with a clear understanding of the 2-1 Temporary Seller Buydown option, which can be a beneficial arrangement for both buyers and sellers in a real estate transaction.

In a 2-1 Temporary Seller Buydown, the seller agrees to contribute a certain amount of money upfront to reduce the interest rate on the buyer's mortgage loan for the first two years of the loan term. This results in lower monthly mortgage payments for the buyer during the initial years of homeownership.

Here's how it works:

  1. Seller Contribution: The seller allocates funds to the buyer's mortgage lender. This money is used to cover the interest rate reduction for the first two years.
  2. Interest Rate Reduction: The buyer's interest rate is temporarily "bought down" for the initial two years. This means the buyer pays a lower interest rate than the standard market rate during this period.
  3. Monthly Savings: As a result of the reduced interest rate, the buyer enjoys lower monthly mortgage payments during the first two years. This can make homeownership more affordable and manageable, especially during the early stages.
  4. Long-Term Benefits: While the seller buydown helps the buyer save money initially, it's important to note that the interest rate will gradually increase to the original market rate after the initial two-year period.

This arrangement can make a property more attractive to potential buyers, as it provides immediate financial relief during the crucial initial years of homeownership. For sellers, it can help expedite the sale of the property by offering a more competitive financing option.

P.S. Can I count on you to call us when any friends, family or coworkers are looking to buy, sell or refinance a home?  We'd love to help! You can just text/call me at 480.553.8770. * Did you know we can finance in 45 states?

 

Here is an example of clear mortgage plan for a 2-1 Temporary Seller Buydown option

A house with bubbles coming out of the window.

Why This Housing Market Is Not a Bubble Ready To Pop

By Kevin Brierton Team | April 21, 2022

Kevin Brierton – 4.21.2022 Homeownership has become a major element in achieving the American Dream. A recent report from the National Association of Realtors (NAR) finds that over 86% of buyers agree homeownership is still the American Dream. Prior to the 1950s, less than half of the country owned their own home. However, after World War II, many returning veterans used…

A woman sitting in front of a laptop computer.

How To Approach Rising Mortgage Rates as a Buyer

By Kevin Brierton Team | April 20, 2022

Kevin Brierton – 4.20.2022 In the last few weeks, the average 30-year fixed mortgage rate from Freddie Mac inched up to 5%. While that news may have you questioning the timing of your home search, the truth is, timing has never been more important. Even though you may be tempted to put your plans on hold in…

A close up of a key chain with two keys

Why Pre-Approval Is an Important Step for Today’s Homebuyers

By Kevin Brierton Team | April 19, 2022

Kevin Brierton – 4.19.2022 Being intentional and competitive are musts when buying a home this season. That’s why pre-approval is so important today. Pre-approval from a lender is the only way to know your true price range and how much money you can borrow for your loan. Peter Warden, Editor of The Mortgage Reports, explains: “The lender will check…

A man and woman hugging in front of a window.

Is It Time To Buy a Smaller Home?

By Kevin Brierton Team | April 18, 2022

Kevin Brierton – 4.18.2022 Life events can have a major impact on what you need from your home, and retirement is one of the biggest changes many of us face. This period of your life can mean doing more of the things you enjoy, like traveling, visiting with loved ones, or taking on new hobbies.…

A sign that says understand your home appraisal

How to Understand Your Home Appraisal

By Kevin Brierton Team | April 15, 2022

COMPS, ADJUSTMENTS, AND THE APPRAISER’S ESTIMATE OF VALUE WHAT IS AN APPRAISAL? A home appraisal is an estimate of your home’s value. It’s simply a professional appraiser’s opinion of what he/she thinks your home may be worth. Mortgage lenders base your loan amount on the LESSER of the appraised value or the purchase price. HOW…

A house with flowers growing around it and a white picket fence.

On the Fence of Whether or Not To Move This Spring? Consider This.

By Kevin Brierton Team | April 14, 2022

Kevin Brierton – 4.14.2022 If you’re thinking of selling your house, it may be because you’ve heard prices are rising, listings are going fast, and sellers are getting multiple offers on their homes. But why are conditions so good for sellers today? And what can you expect when you move? To help answer both of those questions, let’s turn to the data.…

A close up of the keyboard keys with percent symbol

Where Are Mortgage Rates Headed?

By Kevin Brierton Team | April 13, 2022

Kevin Brierton – 4.13.2022 There’s never been a truer statement regarding forecasting mortgage rates than the one offered last year by Mark Fleming, Chief Economist at First American: “You know, the fallacy of economic forecasting is: Don’t ever try and forecast interest rates and or, more specifically, if you’re a real estate economist mortgage rates, because you will…

A man shaking hands with another person.

Why a Real Estate Professional Is Key When Selling Your House

By Kevin Brierton Team | April 12, 2022

Kevin Brierton – 4.12.2022 With today’s real estate market moving as fast as it is, working with a real estate professional is more essential than ever. They have the skills, experience, and expertise it takes to navigate the highly detailed and involved process of selling a home. That may be why the percentage of people who list…

A woman and girl in the kitchen preparing food.

Using Your Tax Refund To Achieve Your Homeownership Goals This Year

By Kevin Brierton Team | April 11, 2022

Kevin Brierton – 4.11.2022 If you’re buying or selling a home this year, you’re likely saving up for a variety of expenses. For buyers, that might include things like your down payment and closing costs. And for sellers, you’re probably working on a bit of spring cleaning and maintenance to spruce up your house before you list it.…

A wooden toy house with an arrow pointing up.

The Future of Home Price Appreciation and What It Means for You

By Kevin Brierton Team | April 7, 2022

Kevin Brierton – 4.7.2022 Many consumers are wondering what will happen with home values over the next few years. Some are concerned that the recent run-up in home prices will lead to a situation similar to the housing crash 15 years ago. However, experts say the market is totally different today. For example, Odeta Kushi, Deputy Chief Economist…

P.S. Can I count on you to contact me if you hear that a friend, family or coworker is looking to buy, sell or refinance? Call/Text 480.553.8770 - We'd be honored to help them too!