Craft Beer and Pilates Lessons: Buying a Home at High Interest Rates

The US housing market is slowing.

Monthly payments are out of reach for many homebuyers, and some sellers are reluctant to face a real estate environment with mortgage interest rates approaching 7% and fewer affordable homes. , hesitant to raise the stakes.

But the wheels of commerce need to keep spinning, and some realtors are finding creative ways to close deals. Everything from pitching adjustable-rate mortgages to offering free Pilates his lessons are being considered.

On the funding side, so-called buy-down incentives are currently rising in popularity, experts say. In this type of arrangement, the seller “buys out” the interest that the homebuyer must pay in the first few years of the mortgage. For example, in a 2-to-1 buy-down scenario, the first her one-year buyer’s rate is 2% lower than his contract rate. In the second year, it changes to 1% or less. After his first two years, the mortgage payment will return to the contract rate.

Buydowns are popular with sellers, especially large home builders like DR Horton and Lennar. This is because the program allows real estate to maintain fixed prices, said Peter Idziak, his senior associate at Polunsky Beitel Green, a law firm that primarily serves mortgage lenders. Renner declined to comment. Dr. Horton did not respond to a request for comment.

Idziak said of mortgage buydowns, “It’s cheaper for builders than just offering a simple markdown, and it’s not as public as markdowns.” “Builders still have cash buyers, and it will not only impact cash buyers, but it will also upset some buyers who may have previously paid a higher price. “

Floating rate mortgages revived

Variable Rate Home Loans (ARMs) are also soaring to a 14-year high, according to the Mortgage Bankers Association. These types of loans have interest rates that change regularly depending on where the benchmark mortgage rate is. As many buyers expect mortgage costs to fall as the global economic slowdown looms, more people are finding ARM contracts to be a safe bet. This is in stark contrast to the 2008 financial crisis, when the overheated housing market turned into a collapse as house prices fell and some financial institutions went bankrupt.

“ARMs are back,” said Hagan Stone, a Nashville-based real estate agent. optimism,” Stone said. “For the time being, it is our job to help people cover their monthly payments and make their initial investments.”

Purchase offer packages now include other perks, such as free refinancing within three years, Stone said.

“I always tell people that the rate you are buying is flexible and you can reset it…but for investing, now is the better chance and the better deal. It’s a great opportunity to have.”

That’s because there’s less competition for homes now that fewer buyers can afford them. The National Association of Realtors reported Thursday that existing home sales fell for his eighth straight month, down 1.5%.

Adopting a non-traditional approach

However, the decline has been uneven and many markets are still in favor of sellers at the moment. This includes Nashville, Stone’s hometown. Recently, a buyer offered one of his sellers a free Pilates lesson, he said.

“We are uniquely positioned to navigate this market successfully,” Stone said. Still, options that include buy-downs and closing costs have proven helpful in allowing homes to keep moving.

Stillwater, Minnesota real estate agent Lauren Janosky told NBC News that a recent buyer client noticed the family had installed a barrel draft setup in their home, which was effective across Minnesota and Wisconsin. said he offered to include a craft beer pass with the seller.

“So we knew what kind of beer they liked and we knew they had young children. “I hope this gives them a date night,” Janoski said.

The buyer’s $295,000 offer was lower than the $330,000 value of a comparable home in the area.

“The seller’s agent has revealed that there are other very strong offers that exceed our asking price, but appreciates the additional terms, the thought put into us, and the creativity. ” said Janoski.

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