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Buyers AND sellers - Pay Attention!

Another concession, if you will, that we are seeing in our Carlsbad market and elssewhere (and I imagine in other buyer-friendly markets around the US) is the mortgage buydown. So what is this?

A mortgage buydown is where the sellers pay an agreed-up dollar amount to the buyer's mortgage lender (as part of the closing fees) as a way of reducing the mortgage interest rates - essentially paying points on the buyer's loan that reduces their rate and thus the monthly payments. This can be done for a temporary period or permanently.

• The advantage,for the buyers, is that the reduction in loan payments by paying points upfront allows the buyers to afford more of a home (or afford the home they want)
• The advantage for the sellers is that they get a higher asking price since the prepayment is less than the reduction in asking price required to result in the same monthly payment.

For example, the sellers might make a payment of $18K on behalf of the buyers, thus reducing the monthly payment by about $229 (depending on loan); they would need to reduce their asking price (or get an offer) of about $45K less in order for the buyers to obtain an equivalent monthly payment. So for a payment of $18K by the sellers, the buyers end up with a home (and loan) that is the equivalent of $45K less , and the sellers come out ahead by $27K. A win-win for all.

Sound interesting? Talk to the appropriate professionals, both on the real estate and mortgage sides.

  Start YOUR CARLSBAD HOMES SEARCH HERE (and other San Diego communities too)