This article was sent to us by Laynie McClain at Bank of America Home Loans. We enjoyed it and think it will benefit you as well. If you have further questions, give us a call, or you can reach Laynie at 208-743-0549.
Assumptions:
$200,000 Sales Price
Borrower has $40,000 to put down
Scenario #1
Seller drops price $5000 to move the house
1. $160,000 Loan amount= $858 PI
2. $155,000 Loan Amount= $832 PI
**Saves the borrower $26 per month
Scenario #2
Seller keeps price at $200,000 and markets a seller paid 2/1 buydown (assuming today's interest rate is 5%)
Year One: 3% rate= $672 PI = $184 monthly savings
Year Two: 4% rate=$763 PI= $95 monthly savings
Year 3-30: 5% rate= $858 PI
What is the Cost?
Year One Savings= $184 per month x 12 months = $2208
Year Two Savings = $95 per month x 12 months = $1140
Total Savings= $3348= Cost
Benefits:
1. Borrower: Substantial savings for two years;
2. Realtor: Sells a home that has been sitting
Keeps commission at the highest possible
3. Seller: Sells home that has been sitting
Saves $1652 ($5,000 price reduction vs.. $3348 for buydown)
4. Market: Keeps the values as high as possible
Buydown programs are a great tool to market and sell homes!
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