The topic of housing affordability has become a hot-button issue. Home values continue to rise and the government’s response to the inflation issues they created has sent interest rates up after record lows from a few years ago.
There is a way to get your interest rate and payment much lower. Yup! No special government program, no bill needed to pass the Senate and House. All you need is some intelligent contract structuring, quality realtor relationships, and a wise home loan advisor. With the right approach, you can make house financing better and more affordable. Here are three steps you can take to achieve this:
Step 1: Set up the contract correctly.
Did you know that you can structure a real estate contract to have the seller give you money at closing? When buying a home, there are often additional costs associated with the transaction outside of your down payment. Negotiating with the seller to cover these expenses can make a big difference. In some cases, you may be able to negotiate for a significant contribution from the seller. For example, we recently helped a client secure $9,000 from the seller to cover their closing costs. This negotiation can help you save money in the long run and make your financing more affordable.
Step 2: Work with a realtor who will give you some of their commission.
Yes, you read this right–a realtor can give you some of their commission to use at closing. This is rare but absolutely legal. Finding the right realtor can help make house financing more attainable.
At Stewardship, we believe that real estate agent commissions are too high (watch this video to learn more). This is why we offer a flat fee model and give a portion of our commission to our clients to use at closing. This can help offset some of the costs associated with buying a home, making financing more affordable. We literally give thousands of dollars to people to use at closing when they use us as their realtor. By working with a realtor who is willing to give you some of their commission, you can save money and make your financing manageable.
Step 3: Use the contributions you get to buy down your rate and lower your payment.
As mentioned in this blog, lenders have a list of interest rates they are able to offer. However, not all rates are equal. Some give you credit and some have a cost. This means you do not have to accept the “market rate.” You can get a below market rate if you have money to pay for it.
Once you have secured seller contributions and a portion of the realtor’s commission, you can use these funds to buy down your interest rate. This will reduce your monthly payments for the life of the loan, saving you a significant amount of money. This can make a big difference in your overall finances and help make your homeownership dreams attainable.
By following these three steps, you can structure your next home purchase to have better financing. Negotiating with the seller, finding the right realtor, and using contributions to buy down your interest rate are three strategies that exist in today’s real estate transactional framework! You simply need to work with a wise and loving team willing to help you execute.
If you are interested in a free home buying game plan that includes these three steps, check out this web page.