How To Lower Your Payments and Mortgage Rate by the Seller

How do I get a 3% mortgage rate payment when the rates are actually at 7%? My agents and  I have been working on different strategies to make this happen, as one of the biggest concerns today is the interest rate. A year ago, rates were at 3%. Today they’re at 7%. So a lot of us are more concerned about the actual payment we have per month rather than the sales price. We recognize that sales prices have not come down, while payments have gone up because of the rate.

How can we negotiate a deal where your payment would still be the same as the 3% rate, even though it’s at 7%? If you go to the seller and say, “Hey, I understand you’re listed today at $699,000. Ultimately, it’s worth $699,000. I’ll pay you your price. We’ll give you the $699,000. However, here’s a situation. A year ago, the payment was 3%. That’s the rate I would love to have.”

So my payment on this purchase today is $3,000 at 3%. However, now it’s 7%. My payment will be $3500, with a $500 difference or $6,000 a year between the payments. The purchase price is the same, but the difference in cost between 3% and 7% is $500 per month. What if you went to the seller and said, “Hey, Mr. Seller, I’ll give you your number, but ultimately, here’s what I want: I want four years’ worth of my payments covered by you and put in an escrow account—whatever the difference would be between the $3000 I feel that it should be versus what it is.”

“So how do we negotiate a deal where your payment would still be the same as the 3% rate, even though it’s at 7%?”

What if you went to the seller and said, “Look, I’ll give you the $699,000, but I’m looking for a credit back for four years’ worth.” So, in this case, $24,000. $6000 per year. It’s a win-win. The seller gets the home sold for the full asking price. Yes, they give you a credit back for the difference, say four years’ worth of the difference between the payments. You get the house. Then, within the next four years, rates will come back down. Where are they going to settle out? We don’t know, but there is an opportunity then for you to refinance at that point.

In addition, why not structure a deal where you’re going to get a ten-year loan? Or an ARM or a 30-year fixed? We know the rates won’t stay at this level for 30 years. So you can get an even lower rate. Your concern, however, is about today’s rate and what it was. Why not negotiate to have the seller pay the difference in what you thought the payment should be versus where it is?

So for more tips and strategies on how to put a deal together like that, we’re doing this all day long. Give me a call. Reach out at Jeff@thequintingroup.com or call me at (609) 398-5333. Thanks so much.