Mortage Rate Buy Down…Worth it?
In the mortgage business, we see several different approaches that fixer upper investors take that can help flip a house. One of the best tactics is a rate buy down.
Keep in mind that the lender on a home will only allow a house flipping seller to contribute a certain amount (3% for example) towards the buyers closing costs and prepaid costs. Starting with that figure in mind, we as sellers can decide what we are willing to give to the buyer in order to make the deal more enticing. It may cost you $1,000 or more to lower your prospective buyers payment by $75 per month. Sure, $1,000 is a lot of money. Consider, however, that it could help with flipping houses a few months faster by offering to buy down the mortgage rate. Now that $1,000 just saved you a few months of carrying costs and maintenance – well worth the cost!
Buying down a mortgage rate can decrease your buyers payments dramatically. Their are several different kinds of mortgage buy-down programs including those that keep a low rate for 30 years, or those that slowly step the rate back up to par over less than 3 years. Either way, being flexible by offering a rate buy-down to your prospective buyers will help to sell your real estate fast.
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