Is there really a way for buyers to afford a higher price at a lower payment? With the increase in interest rates, it’s important to have as many tools as possible to help a transaction come together. A true win-win does exist. Here’s how it works and what happened with a recent seller I was representing.
My client was selling their townhome in Oak Park. After trying a higher price, the home was listed at $789,900. A buyer’s agent mentioned their client was very interested, though they were only approved for a maximum purchase price of $750,000. Since my client lowered the price, they had no interest in accepting a $750,000 offer. I checked with a lender and discussed “buying down” the interest rate. With a rate buy down, a fee is paid to the buyer’s lender, allowing the lender to lower the interest rate on the buyer’s loan. In this case, for roughly a $15,000 fee, the interest rate was brought down so much that the buyer would have a lower monthly payment with a $789,900 purchase price than if they purchased at $750,000 at current market interest rates. You can probably see why this is an important strategy to understand in any market, especially this one.