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 FEB. 19, 2007
Sellers: Buy Down the Mortgage, Don't Lower Your Price
In light of rising interest rates, here is a sales incentive to take in to consideration.

As an alternative to lowering the price of their property, sellers might want to consider paying some of the points on the buyer's mortgage in order to lower the buyer's interest rate on the loan.
For example, a 2/1 buydown enables the buyer to obtain a interest rate which is 2 points below current market rate for the first 12 months of the loan and one percentage point lower for the next year, afterwards, the loan reverts back to the current market rate.

Here is an estimate of what a 2/1 buydown would cost a seller: Approximately $4380 for a $200,000 loan. The benefit for the buyer is that their monthly payment for the first year would be $225 less. They would pay $109 less per month during the second year.

In order for the seller to match the first year monthly payment without the buydown, he would have to cut the price of his home by $50,000. A big difference.

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