Special Mortgage Interest Rates

Last night on Facebook, I saw an ad for a builder’s lender promoting “limited time opportunity special interest rate” when you purchase one of their new homes. This was being shared by a Realtor whom I’m “Facebook Friends” with. I decided to price out this “special rate” and proved that the rate, while very low, is actually not so special.

The lender is using points to buy down the rate to below what you typically see advertised. This is something that ANY home buyer can do…and here’s the great news – you don’t have to work with the builder’s lender (which is essentially the same as working with the seller’s lender).

The points that are used to buy down the rate can be paid for by the buyer or seller (builder). The amount a seller can contribute towards closing cost vary depending on the loan program and the amount of down payment the buyer is providing on the transaction. The seller contribution can be used to buy down the interest rate, pay closing cost or even reduce private mortgage insurance. There are many possibilities!

I’m actually glad to have seen the FB post. I’ve been meaning to write about “Seller Buy Down” strategies. Sometimes it may actually be more beneficial for a home buyer to negotiate the seller to pay points to go towards lowering an interest rate instead of making a low offer. More on that in a future post!

Here’s the bottom dollar:

1. You probably do not have to work with the builder’s lender to get a special rate. Your real estate agent can negotiate the seller to pay points regardless of who the lender is.
2. When you work with the builder’s lender, the loan officer who is supposed to be helping you actually works for the seller.
3. Often times, when the builder is offering promotions, it’s built into the sales price.
4. Reduced interest rates are available on any home if you or the seller are willing to pay the points to buy the rate down.
5. Before making a low offer, check with your lender to see what your scenario would look like doing a “seller buy down” instead”.

Last but not least, if you are interested in buying or refinancing a home located anywhere in Washington state, where I’m licensed, I am happy to help you!