I’ve been talking a lot about the window of opportunity RIGHT now to buy a house. It is a small but pronounced window where the conditions have shifted closer to a buyer’s market than they have been in the last 4 or so years. The big hang-up, of course, is still the interest rates. So, what do you do? Following are a couple of options that can help.
1) 2/1 buydown–If you believe rates are going to drop sometime in the next 2 years, this is a great option–especially if you get a seller to pay for it. Basically, you prepay a portion of the interest at the beginning of the loan. SO if your rate is 7%, then year 1 your payment reflects a 5% rate, year 2 is 6% and year 3 is 7%. They don’t waive that interest–you just pay it at closing, and it reduces your monthly payment.
2) Reduced fee refinance–Several lenders are offering some version of this (including my guy Bryan Nale at Primis). They are incentivizing buying right now by offering you the chance to buy now and take advantage of this window and then 6 months or more from now you refinance, and they waive a big portion of the fees. You would still pay title but not much of the lender fees. Makes that refi much cheaper. You get the best of both worlds, just with a delay.
3) First-time buyer programs in-house–Several lenders are offering programs in-house (they don’t sell them) for first-time buyers. Everything from above 100% financing to no mortgage insurance, to alternative qualifications (for mediocre credit). Two of the biggest credit unions have some phenomenal programs like this!
4) A little harder to work this but it is possible, loan assumptions are out there! You might be able to assume someone’s loan (at 2.___ %!). It will take a little work and creativity (to cover the difference) but it should certainly be investigated.
Originally posted January 24, 2023