Point Buydown?

Asked by K&c Ruggiero, 45040 Mon Apr 14, 2008

I'm FSBO/agent assisted. I'm thinking about some possible incentives to draw in some buyers.
How much is it to buy down a point on an interest rate?
Is this something that I would have to make a deal with a specific lender, or can I market to buyers that I will offer $ towards point buydown and they can then apply as needed?
Thanks so much!

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Ute Ferdig, Agent, Newcastle, CA
Mon Apr 14, 2008
Yes, you can just offer a buyer credit that the buyer can apply anyway they like. What will be most beneficial for the buyer will really depend on the type of loan they'll get. There are buydown programs that let you buydown the interest rate for the buyer for a few years, which means that the buyers will pay a lower interest for the first 2 or three years and then their interest rate will adjust to the regular interest rate based on which they qualify for the loan. You can also check into the Nehemiah program which is a downpayment program (see link below). Why not team up with a loan agent who can help you prepare a flyer that shows some of the most popular programs that are available. Put the information and the agent's contact information on the back of your flyer and maybe the loan agent even has a sign rider that you can display together with your for sale by owner sign. Good luck.
2 votes
Brittany Sim…, , Columbus, OH
Tue Feb 10, 2009
Typically one point or 1% of the loan amount will buy the rate down 1/8-1/4% depending on the lender.

I would offer $3,000-$5,000 in closing costs which can be used for discount points and other fees associated with the loan. (as an example)
0 votes
Barbara Q., , Bergen County, NJ
Tue Feb 10, 2009
Sellers can Permanently Buydown a Buyer's Interest Rate or Temporarily Buydown a Buyer's Rate. We advocate a Temporary Interest Rate Buydown for the first 2 to 3 years. This program is much more effective and impactful than offering Standard Price Reductions.If you are interested in learning more about the cost and benefits of offering a temporary interest rate buydown...please check out our site. Good Luck!
Web Reference:  http://www.321ADVANTAGE.com
0 votes
Keith Sorem, Agent, Glendale, CA
Mon Apr 14, 2008
K & C
90% of the time the buyer that first sees the home they buy is with a Realtor. So if you are not getting offers, it means that Realtors do not believe your home is worth showing or making offers. The value an expert Realtor brings is not only knowing the market stats, but knowing the market. Who you competition is, what they are doing, the selling prices, who is reducing prices, offering incentives. Unfortunately you have none of that knowledge, and we, on Trulia, can only make guesses.
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