The Buydown Comeback: How Buyers are Lowering Payments – Notes from Tracy Shaw of Prestige Capital
Housing inventory is up this month, as current interest rates have sidelined many potential home buyers. As a result, we see more sellers willing to lower prices or make concessions, often leaning towards a temporary buydown to attract more serious buyers.
Current Rates and Projections
Freddie Mac reported the national average on 30-year fixed-rate mortgages at 7.40% in last week’s survey, and Fannie Mae projects the average rate on the 30-year fixed will remain at 7.4% for the rest of the year, edging up to 7.5% through December 2027. In fact, most major housing forecasts project rates to remain at or above 7% in 2027.
Why a Buydown is a Win-Win
When a seller lowers the sale price on a home, it sets a lower comparable sale price in the neighborhood, which can have a negative effect on surrounding property values. On the other hand, offering a temporary buydown does not affect property values, attracts more buyers in a slow market, and often costs less than lowering the price of the home.
For the buyer, it temporarily lowers the interest rate – usually for one to three years – cutting hundreds of dollars off the monthly payment. This gives the buyer a chance to ease into monthly payments at the full rate, and may also ease cash flow to cover initial expenses like moving costs and other immediate needs.
Buyers should start with full pre-approval upfront, to be in a good position to negotiate seller concessions. Give me a call if you, or your friends and family, need a mortgage professional who’s ready to go the extra mile!
Best regards,
Tracy Shaw
President & Chief Lending Advisor
NMLS # 913749 | CalBRE # 01894272
Direct Line: 626.758.0588
Prestige Capital Inc.
NMLS # 2588930
41 E Live Oak Ave, Arcadia 91006
Helping clients achieve home ownership with expert lending solutions and personalized guidance.
