Seller Paid Buydown
This strategy can help whether you're buying or selling.
In times of rising interest rates, affordability can suffer. Smart sellers, buyers and agents can offset the impact of higher rates with a Seller Paid Buydown.
What is it?
Borrowers often know they can lower the mortgage interest rate for the life of their loan by paying “points.” With a Seller Paid Buydown, the home seller pays points to reduce the rate for the buyer. Also ask me about a 2/1 Buydown, where the seller, builder or realtor pays to discount the rate for 1-2 years. This will help you ease into your mortgage and lower monthly payments temporarily.
How does it help?
The Seller may still command a higher price for a Seller Paid Buydown concession. The cost of points can be deducted from their capital gains tax (*consult with your tax preparer).
The Buyer gets a lower rate and lower monthly payment without paying the upfront cost of points. As long as the appraisal supports the value, the seller concessioin can be included in the price. Plus, the buyer may be able to take a tax deduction on the points paid, even if the seller pays them through a concession (*consult with your tax preparer).
A Seller Paid Buydown is just one way that today's buyers can get the home they want, despite higher rates.
Working with an experienced mortgage professional will help you discover solutions like this one. Reach out when you’re ready, and I’ll be happy to help you create a mortgage plan that works for you.
*Always consult a tax professional
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.