Interest rates are more than double what they were a year ago and many buyers are paralyzed.
But did you know? Right now almost every new contract coming across our desk includes "seller concessions"— meaning, sellers are contributing cash out of their proceeds to help the buyers with their closing costs, which can include, buying the rate down.
Sometimes the "buy downs" are fixed, and sometimes they're graduated Temporary Buy Downs. Here's how the Temporary Buy Down works:
My buyer client purchases a $750,000 home. Their loan is $562,000. Let's say I am able to help said buyer get $30,000 in seller concessions. Buyer uses these funds for a Temporary Buy Down. The note rate is 6.5% but with this buy down...
- 1st year rate = 3.5% (a savings of over $1000 per month on their mortgage)
- 2nd year = 4.5%
- 3rd year = 5.5%
- 4th year it would go to the note rate—at which point we all hope rates are lower again and buyer can refinance (don't expect 3% though!).
If this buyer refinances before all of the $30,000 Temp Buy Down funds are used, the leftover funds will go towards the payoff of their loan.
So all of this is to say, there are options if you want to make a move. In addition, escalations are rare, inspection contingencies are common, and offers contingent on the sale of your current home are plausible... It's not all bad out there!
