Home Buying in Portland>Question Details

Bill Carter, Other/Just Looking in Portland, OR

Can anyone explain how some home sellers offer lower rates than others. I thought these were determined by

Asked by Bill Carter, Portland, OR Mon Feb 18, 2008

the Fed. I noticed that Renaissance Homes is offering a super low rate on their homes. How do they do this?

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You mean someone who come on trulia voices and pretend to be someone else to promote the business of some one else who in reality is that person!!?? I'm Shocked! Absolutely Shocked!!
1 vote Thank Flag Link Mon Feb 18, 2008
Money lending is a competitive business, and the sub-prime lending fiasco has left builders with excess inventory that they cannot move as quickly as anticipated. In addition to the possibility that the builders are buying down the rates, rates also vary from lender to lender. So too do the fees. When shopping for rates, ask what the APR is (not the same as the stated rate) and what the non loan-related fees are.
1 vote Thank Flag Link Mon Feb 18, 2008
Charge more for a home (Keep new development inflated to keep recent buyers happy and builders margins relatively intact) then buy down the rate and offer other incentives. You must weigh the costs in any case. Sometimes a builder buy down can be good....sometimes not. You must do the math to make certain a deal is truly a deal.
1 vote Thank Flag Link Mon Feb 18, 2008
UPDATE: 'Bill Carter' appears to be shilling for Renaissance Homes. Check out Portland real estate blogs and other public forums where he professes his love for the Renaissance product.

Like this: http://www.topix.com/forum/city/beaverton-or/TBCRCLRE75RAF3H2S

I hope it's not someone working on behalf of Renaissance. They build nice homes and don't need to spam to sell them.
Web Reference: http://www.repdx.com
1 vote Thank Flag Link Mon Feb 18, 2008
A buy down is a point charge (.25, .5, or more...typically not to exceed 1.25 points) on the loan amount. The buyer is responsible for this, and may negotiate that the seller pay for this. Buy downs are not typically for the life of the loan either...correspond with your lender for accuracy. This can grow quite expensive, but does reduce monthly debt service...and if the seller pays for this...price is inflated, but over 30 years the pinch is not felt typically.
Web Reference: http://www.HouseNow.com
0 votes Thank Flag Link Tue Feb 19, 2008
Anyone can buy down an interest rate and that is what they are doing. It's kind of like prepaid interest. It may be a buydown for a specific period of time, (usually two years) or the full term of the loan. Any Seller can contribute to a Buyers closings costs and buy down the rate. Most loan programs only allow the Seller to contribute 3% of the sales price.
Web Reference: http://BuyOregonHome.com
0 votes Thank Flag Link Mon Feb 18, 2008
Like Christopher suggests, the money's got to come from somewhere. Or, as the saying goes, there's no such thing as a free lunch. I don't know the home builder in question, but a buyer really has to ask whether it makes sense to get a reduced rate for a year or two, then pay more--once the rate readjusts--on a larger mortgage. In times of steady or slightly rising prices, it can make sense. In times of declining prices, you may just find yourself stuck with a home worth substantially less than you owe. And with the Fed likely to continue cutting rates, those "super low" rates today may not be so "super" tomorrow.

Just a thought.
0 votes Thank Flag Link Mon Feb 18, 2008
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
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They are likely 'buying' the rate down by paying points on behalf of the buyer.
Web Reference: http://www.repdx.com
0 votes Thank Flag Link Mon Feb 18, 2008
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