The Price Isn't the Only Number That Matters

The Price Isn’t the Only Number That Matters

Over the past few weeks, we’ve been talking about creative ways buyers may be able to make homeownership work.

We’ve covered:

• Lower down-payment options

• Seller-paid closing costs

• Ways to reduce the amount of cash you may need upfront

For the last part of this series, let’s talk about another number that matters just as much:

Your monthly payment.

When buyers look at homes, it’s natural to focus on the price.

But two buyers purchasing the same-priced home can have very different monthly payments depending on their financing.

And sometimes, instead of concentrating only on negotiating the purchase price, there may be other strategies worth discussing.

What About Buying Down the Interest Rate?

In some situations, money can be paid upfront to obtain a lower mortgage interest rate.

These are commonly called discount points.

A lower interest rate can mean a lower monthly principal-and-interest payment.

Depending on the transaction, those funds might come from the buyer—or we may be able to negotiate for the seller to contribute toward allowable costs associated with the financing.

That can lead to an interesting question:

Would you rather negotiate $5,000 off the price—or potentially use that same negotiating power toward lowering your monthly payment?

The answer depends entirely on the numbers.

Sometimes the price reduction is better.

Sometimes reducing the rate may be more valuable.

That’s why we want to look at the entire transaction rather than automatically assuming the lowest purchase price is always the best deal.

Temporary Rate Buydowns May Be Another Option

Some loan programs also allow a temporary buydown, where the buyer’s payment is reduced during the first year or two before increasing to the full payment.

For example, you may hear terms such as a 2-1 buydown.

This can sometimes make the first couple of years of homeownership easier financially.

But there’s an important point:

You still need to qualify based on the lender’s requirements, and eventually the payment increases.

So this isn’t a magic trick—it’s a financing strategy that needs to make sense for your situation.

What About Lender Credits?

There’s another option that works almost in reverse.

A lender may offer a credit toward your closing costs in exchange for accepting a somewhat higher interest rate.

Why would anyone do that?

Because some buyers would rather preserve cash today, even if it means paying a little more each month.

For another buyer, paying more upfront to obtain a lower rate may make more sense.

Neither choice is automatically right or wrong.

This Is Why We Keep Saying: Look at the WHOLE Picture

The best home-buying strategy isn't necessarily:

“Get the lowest price possible.”

It’s:

“Structure the transaction in the way that works best for YOU.”

That could mean:

• A lower purchase price

• Seller-paid closing costs

• A lower down-payment loan

• A rate buydown

• Lender credits

• Or some combination that your lender says works with your financing

And sometimes the right answer is none of those!

The goal is simply to know your options before assuming homeownership is out of reach.

That Has Been the Point of This Entire Series

If you’ve been thinking:

“I just don’t have enough money to buy.”

We hope these past few emails have encouraged you to replace that statement with:

“Let’s find out what it would actually take.”

Maybe buying makes sense now.

Maybe you need six months.

Maybe you need a year.

Either way, knowing is better than guessing.

Karin and I are always happy to sit down with you, talk through your situation and connect you with a good lender who can show you the actual numbers.

Want to Learn More?

Our FREE Homebuyers Success Academy walks you through the buying process at your own pace.

👉 Homebuyers Success Academy:
https://www.youtube.com/playlist?list=PLU-DcNzz_A94

No pressure. No obligation. Let’s just find out what’s possible.

Ed & Karin
At Home with Ed & Karin

With HEART and a bit of HUMOR, you will feel At Home with Ed & Karin.

Loan programs, interest rates, discount points, seller contributions, lender credits and temporary buydowns are subject to lender and loan-program requirements. Consult a qualified mortgage professional regarding your specific situation.