This Weeks Tips For Listeners

Tips for our listeners…
Your tip for today is – If your negotiation on your real estate transaction should you lower price or have the seller pay for a buy down on your interest rate?  Here is an example of how to take advantage of today’s low interest rate environment and have the seller pay for permanent rate buy down.   

Purchase Price $300,000
Negotiating for a 2% discount – most would lower asking price by $6000 to $294,000

Interest rate of 4.00% on a 30yr fixed assuming – 5% down payment

Purchase price of $294,000 ($6000 discount) loan amount would be $279,300

P&I payment would be $1333

Life time buy down
2% or 2 discount points – usually 1% = .25% interest rate buy down

Buy down would be .5% to 3.5% interest rate on a 30yr fixed – same 5% down payment
Purchase price of $300,000 (full price) loan amount would be $285,000
P&I payment would be $1280

Savings $53 a month or $636 = life of loan $19,080

Temporary buy down
2/1 buy down – 2% or 2 discount points = 2% lower 1st year and 1% lower 2nd year
1^st year 2% interest rate

Purchase price of $300,000 (full price) loan amount would be $285,000

P&I payment 1^st year at 2% rate would be $1053, 2^nd year at 3% rate would be $1201
Saving 1^st year $280 a month, 2^nd year $132 = total savings over 2 years $4944

 How long do you plan on keeping the property – 7.8 years the life time buy down is better

If there are topics you would like to learn about, please email Drew and I at Info@TinaAndDrew.com again that’s Info@TinaAndDrew.com and we will bring them on-air in a future show during our Tips For Listens segment.

Join Drew and I for one of our up coming Buyer Power seminars.

Knowledge is power!