One of the major challenges for home buyers over the last several years has been tightening lending guidelines. When guidelines get tighter the same income level qualifies a potential home buyer for less house for the same monthly payment. In fact, compared to several years ago buyers are seeing their ability to purchase about “thirty percent” less house than during the boom years of 2004-2007.
What does thirty percent less house mean exactly? Well there are a couple of definitions. The first one is that you make due with less. You get a home with three bedrooms instead of four. Or you get a home with an unfinished basement or a two car rather than a three car garages. However, the second definition is you move to a less desirable area. You move to a lesser subdivision or the town next to the one you really want to live in. Or you move into a lower quality school district figuring it’s better than what you have, even though it’s not all you want
This does not have to be the case though. The bottom line is that monthly payments are a function of the current level of interest rates and the principal amount of the mortgage. Most people focus on the mortgage and price being paid for the property. However, little attention is paid to the mortgage rate and the buyers ability to reduce it WITH THE SELLERS MONEY.
The fact is that it remains a buyers market. You can take advantage of this whether you are a consumer or a Real Estate professional. Instead of buying a property for $300,000 with a monthly payment of $1650 at 5.25%, buy a $350,000 at a rate of 4.625 with a payment of $1695 using a seller funded buydown of the interest rate.
So for virtually the same payment, you can buy $50K more house after you have negotiated your best deal. The $50K is the difference between, subdivisions, neighborhoods and school districts. One way to get your family into the school district you desire is to use the seller funded buydown. Click here for a quick video with more details about this innovative program.
Additionally contact the loan officer who provided this to you. They can help you structure this program today!
