How to get the seller to subsidize and lower your mortgage payment
If you are shopping for a home, you may have noticed interest rates have changed a bit. Are you concerned about the current interest rates and how to lower your monthly mortgage payment? Yes, interest rates are higher now than they have been in the last couple of years, but it’s still a great time to buy a house. Today we are going to talk about how you can lower your mortgage payment when you’re buying a home.
One of the best ways to lower your monthly mortgage payment is to have your seller subsidize your monthly payment. I know that sounds challenging but it is done every day in this market. While interest rates are still a bit high compared to recent years, sellers are eager to sell and there are still plenty of buyers looking to purchase a home.
When you make your offer, you’re going to request that the sellers contribute to your payment reduction. This is done with either a 3-2-1 buy-down program, a 2-1 buy-down program, or buying discount points. Today we’re going to focus on the 3-2-1 buy-down mortgage program.
How does a 3-2-1 Buydown work?
The 3-2-1 buy-down program is basically a 30-year fixed-rate mortgage with reduced payments for the first 3 years. The seller subsidizes your payments for the first 3 years by paying into an account at closing. This account is then used to make up the difference in what your payment would have been at the full interest rate and what you actually are required to pay. This account is actually your money now. You cannot use it for anything but payments or principal reductions. That principal reduction will help in the future.
Here is an example of a 3-2-1 Buydown of a $400,000 purchase with 3% down payment. This is an option for first-time home buyers. The seller would contribute $17,352.22 to subsidize your payments providing you a $710.13 lower monthly payment in the first year, $486.68 lower in the second year, and $249.40 in the third year. I think rates will drop enough that I will be refinancing you after your first year.
Asking for a seller subsidy or closing cost assistance instead of a price reduction is a great way for you to get the home you want at the payments you want to pay.
Payment Reduction Refinance Plan
Why do you ask? Well, I believe as do many experts, that rates will drop quickly after inflation is under control. They are likely to drop into the fives or even the fours. When that happens, I will contact my clients and do a payment reduction refinance with no lender fees. The amount of this seller subsidy account that has not been used will be applied to your loan balance which will help lower your payments again.
If you are ready to begin your home buying process, I am here to help. Mortgages Made Easy is my moto. I will make it fast and easy for you. Most people will only need a few documents to get pre-approved. You can start your process now online or over the phone at (214) 945-1066.
My goal is to have you join the hundreds of other buyers that I have helped and I want to make sure I provide you the best rates, the lowest fees and the best service possible so you will leave me a great 5-Star Google review. Happy House Hunting!
Richard Woodward
Branch Manager, NMLS 217454
Your Local, 5-Star Rated Mortgage Lender
Voice/Text: (214) 945-1066
Nexa Mortgage NMLS# 1660690
7820 Hague Ct Plano, TX 75025
Licensed by the Texas Department of Savings and Mortgage Lending (SML) Mortgage Banker Registration. Nexa Mortgage is an Equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to buyer and property qualifications. Rates and fees are subject to change without notice.
