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To Buy Down or Not To Buy Down

Anyone out there using buy downs to help buyers qualify for loans? No one is advertising this in our area, but I have seen it before in a major metropolitan area. In the real estate magazine they had pictures of homes that they did not have listed, but as examples of what they have helped their buyers purchase. The ad contains monthly payments that include PITI based on an average and using a buy down. While I am not interested in selling people a home that is more than they can afford, if the buy down helps them qualify for a loan then I would think it would be a win/win situation. With lenders getting so much tighter on their approvals it seems tougher to get buyer prospects approved.

Posted by Stacey Matsuda on 03/17/2008 09:45 AM

Comments (6)

1st time home buyers, creative financing, mortgage lending practices, spartanburg realtor

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6 Comments on To Buy Down or Not To Buy Down

MAR

2008

Buy downs are good if your people understand the true APR tends to be a little higher. It buys a little time for the buyers to settle into the home. I thought the portion of qualifying at the lower rate has gone away. Please correct me if I am wrong.

I think it is a good idea if all parties know about all of the problems. Thanks for posting. Royal..

Take the difference in monthly payments and divide by 60 months and see what the difference is. You will see this type of bait and switch advertising all of the time. All depends on what the lender will allow with seller conessions

Tony

Those were starting to come back, but I am not sure with the some of the recent shakeup

Jim you are right you do have to use the end rate, I did not know that until you mentioned it- so Thank You!

MAR

2008

Before we go oout with buyers we should have them sit down with a loan officer who should explain the rates and credit standards so that there won't be any more mortgage crisis. Things are changing on a daily basis. No more creative finacing. Sellers can offer to buy down but as Jim explained you should know the end rate.

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