Date the Rate, Marry the House and if it applies Dump the Rent!

What does this mean….rates are not forever but your house is a bit more long term!

Real Estate is a get rich slow strategy, your primary residence is a long term buy and hold strategy, gain equity thru appreciation and paying the loan down over time. Marry the home...
The beauty of buying a home with a fixed rate mortgage is when everything is going up, your mortgage stays the same, gas, food and rent goes up, your mortgage is the constant.
 
BUT
 
What if rates go down, you are not married to the rate, you are just dating, you can refinance and pick a new rate and save money. Date the rate.
  
Buyers are concerned with what interest rates are doing. Yes, they are going up but as we all know rates go up and rates go down. Try, instead, to focus on a payment, what you are comfortable paying each month, and then work back from there. Also, with this seller’s market slowing down some, it may be the time to introduce the temporary Seller Funded 2/1 buydown. 
 
How does this work for the Buyer?
This is a seller funded program that gives the buyer, a reduced rate for the first 1 to 2 years, with lower monthly payment. And if the economy continues on its current path, buyers may be able to refinance into a lower rate BEFORE the actual note interest rate kicks in, on year 3. With interest rates higher than they have been for a long time, many buyers are getting scared. Simply afraid to purchase because of the interest rate. A temporary buydown allows the buyer to lower their monthly mortgage payment in the first 1 to 2 years. It is temporary, but can give them the confidence they need to get into this market.
 
How does these work for the Seller?
For the seller, offering a temporary buydown can allow for a higher purchase price, and eliminate the need for price reductions. It can have very little effect on the bottom line, net proceeds, while increasing the buyer pool due to their comfort level. Buying down the rate may have a greater impact on the monthly mortgage payment for your buyer.
 
What does this look like? The interest rate is lowered 2% for the first year and 1% for the second year. So if the initial rate was 7% in the first year, the buyer will get the savings benefit of a 5% rate the first year and then 6% rate in the second year. That interest savings is funded by the seller at closing, and put into an escrow account and used to make up the difference in the monthly payment over the next two years. Very simple! The lender uses it to pay down the interest rate for a set period of time. The big advantage to this is that those are the buyer's funds. If the homeowner refinances later, they don't lose any remaining money in the account. With a permanent rate buydown, any money used upfront to acquire a lower rate will be lost if a refinance occurs at a later date.

Dump the Rent - This is the big one! You need to decide who’s mortgage you want to pay, yours or your landlords. An American homeowner’s net worth is 40x greater than that of a renter and this is because of home ownership.
 
So Marry that House!
 

"Intro. written by Lorraine McCarthy from Fairway Mortgage".