Lower Your Payment

House Ranch

Lover my payment, that sounds good David, and what are you talking about? And how do you do it? The other day I was talking to my tenant Gonzo whom I offered to sell my house to. He being like anyone else wants to have the lowest price/payment he can. He was asking for a lower sales price, and from his viewpoint, that’s a good idea. And, what does he really want? So, I asked him and he wants the lowest payment possible. I told him that I will pay the highest available closing cost for him the buyer.LukeSign_18x24_Tag1_preview

Here is where I got creative. Yes lowering the price will lower the payment, but not all that much. If I was to lower the price say $5,000 it would only lower the price at say 4.75% interest by $19.79 per month. The $19.79  will buy you a ok dinner, that’s it? Not a great saving and I did lower the price by $5,000, which to me IS a lot of money and a whole lot more that $19.79.

What if rather than lower the price, were take that same $5,000 and buy down the interest rate. What that means is that the $5,000 can lower the interest rate. How much it will lower the rate has several factors the length of the loan, type, lone amount to name a few. The POINT is, is that the buyer or Gonzo can save more by buying down the interest rate. If he is buying my house for $525,000 at 4.75% interest. Let’s say the $5,000 can buy down the interest to 4.25%, that would save Gonzo  $218.75 every month, the is a lot more than the $19.79. Let’s say the $5,000 only buys the rate down to 4.5%, Gonzo still saves $109.38 that is still a much better ROI, (return on investment) for Gonzo.

I hope that this idea serves you well.

David Kline Lovett NextHome First Choice (Your Choice) Realty

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