Financing Strategy
Your Rate Is The Problem. Your Price Is Not.
Most buyers negotiate the price and never ask about the rate. On the same house, asking the seller for a rate buydown instead of a price cut can lower your monthly payment more, for less money off the seller's side. Builders in Prosper, Celina, and Frisco do this constantly. Resale sellers will too, and almost nobody asks.
The Comparison
Price cut versus buydown, on the same $500,000 house
Option A
Ask for $15,000 off the price
- New price $500,000 becomes $485,000.
- On a 30 year loan the monthly payment drops by roughly $85 to $95.
- It takes years to feel it.
Option B
Ask for $15,000 toward a rate buydown
- Price stays $500,000.
- That money buys the rate down, often by roughly 1 to 1.5 percentage points on a permanent buydown, or funds a 2-1 temporary buydown.
- Monthly payment drops by roughly $300 to $475 in the early years.
Same fifteen thousand dollars. Three to five times the monthly impact. And the seller often prefers it, because their sale price on record stays intact.
Illustrative. Actual buydown cost and rate reduction depend on your lender, loan type, credit, and the day's pricing. Raven Mok is a real estate agent, not a lender. Confirm all figures with a licensed loan officer.
The Two Kinds
Temporary or permanent
Temporary, the 2-1 buydown
Year one your rate is 2 points lower. Year two it is 1 point lower. Year three onward you pay the note rate. Best when you expect to refinance, or your income is rising and you want the relief now.
Permanent, discount points
The lower rate lasts the whole loan. It costs more per point of reduction, and it is the better choice when you plan to stay in the house long enough for the lower payment to outrun the upfront cost.
Run It Yourself
The buydown calculator
Put in the house you are actually looking at. Nothing is stored and nothing is emailed.
Estimated principal and interest
No buydown
6.75 percent
$2,594
Year 1
4.75 percent
$2,087
Year 2
5.75 percent
$2,334
Year 3 onward
6.75 percent
$2,594
Total buydown cost
$9,215
Year 1 monthly savings
$508
Estimate only. Principal and interest on a 30 year fixed loan. Excludes property taxes, insurance, HOA, and mortgage insurance. Actual buydown cost and rate reduction depend on your lender, loan type, credit, and the day's pricing. Raven Mok is a real estate agent, not a lender. Confirm all figures with a licensed loan officer.
For the full payment picture including taxes, insurance, and HOA, use the mortgage payment calculator.
The Script
How to actually ask for it
1
Find a listing with days on market above the area average
Motivation is the whole game. A seller in week two says no. A seller in week nine runs the math with you.
2
Have your lender price both scenarios before you write
The offer should name a dollar amount and a structure, not a concept. Sellers say yes to numbers and stall on ideas.
3
Write at or near asking price with seller paid costs directed to the buydown
Sellers accept this far more often than a price cut of the same size, because their sale price on record stays intact.
4
Know the cap
Seller concessions are limited by loan type and down payment, commonly 3 to 6 percent on conventional and more on some programs. Your lender confirms your specific cap before you write.
5
New construction is the easiest yes
Builders protect their price per square foot for the comps and will spend on financing incentives instead. In Prosper, Celina, and Frisco this is the standard play, not the exception.
If you are earlier than this and still deciding on area, price band, and timeline, start with how the buying process works with me.
Why I Push This
Most buyers I meet spend all their negotiating room on the price and never touch the rate, which is the number that actually sets the payment they live with. I would rather hand you the ask that moves your monthly number, even on a house I did not find for you.
Raven Mok
Active eXp Realty DFW | CLHMS | Former CPA
For A Specific House
Get the buydown play for a specific house
Send me the address you are looking at. I will tell you whether that seller is likely to say yes, what to ask for, and what it does to your payment.
Buyer Next Step
Start With What You Can Actually Afford
A buydown changes the payment, not the budget. Set the ceiling first, then negotiate the structure that gets you under it.
Active eXp Realty DFW | CLHMS | Former CPA