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I Want To Buy This House - How Can I Afford It?
You tell your real estate agent "I want to buy this house, how can I afford it?" It's the house of your dreams - the right number of bedrooms, a great kitchen, and a nice back yard. The problem: it's slightly out of your price range. What are your options?
One option you could choose that can help you afford to buy this particular house is to use the buy-down strategy.
The buy-down strategy is made up of two components. The first component is lowering the interest rate by paying points. One point is equal to 1% of the loan amount. Each lender usually has a matrix of rates and points charged. For example, the matrix might look like this:
8% 0 point 7.5% 1 point 7% 2 points 6.5% 3 points 6% 4 points (rates presented are for illustration purposes only and are not a solicitation) Paying more points up-front at the close of escrow means that you get a lower interest rate! To implement part one of the buy-down strategy, the buyer would choose the lowest rate so that he would be able to afford to buy this house. Part two of the buy-down strategy is to put language ... more

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