Have you ever thought that getting $20,000 off the price of a home must be better than getting a $20,000 seller credit?

Not necessarily.

Sometimes, using a seller credit to help buy down the buyer’s mortgage interest rate can have a much bigger impact on the monthly payment.

For example, let’s say a buyer purchases an $800,000 home with 20% down.

At a hypothetical 6.50% interest rate, the principal and interest payment on a $640,000 loan would be approximately $4,045 per month.

If the seller reduces the price by $20,000, the payment would be approximately $3,944 — a savings of about $101 per month.

But if instead the seller provides a credit and the lender is able to use it to permanently reduce the interest rate to 6.00%, the payment would be approximately $3,837 — about $208 less per month.

Same negotiation. Potentially very different result.

This is why I like to look at the entire picture before automatically asking for a price reduction.

Depending on the property and financing, we may be able to negotiate:

✓ A lower price
✓ Closing costs
✓ A permanent interest-rate buydown
✓ A temporary rate buydown
✓ Or a combination

For sellers, this is important too. Sometimes offering buyers help with their financing may be more attractive than simply reducing the asking price again.

Every situation is different, and seller credits and rate buydowns are subject to lender and loan-program requirements.

If you’re thinking about buying or selling, let’s run the numbers and see what makes the most sense.

Mariness Chata
RE/MAX of Santa Clarita
(661) 317-3332
RealtorMariness@gmail.com

Examples are for educational purposes only. Payments shown are principal and interest and do not include taxes, insurance, HOA or other costs. Rates and lender pricing vary.