Pros and cons of lowering mortgage interest rates

Phoenix (3TV/CBS 5) – A few months ago, Phoenix-area homes received a flood of offers within days. Now, sellers are slashing prices and buyers are negotiating concessions, with the average mortgage interest rate for 30-year mortgages exceeding 7%.

“Obviously the market has completely changed. offerpad mortgage“With interest rates more than doubling since the beginning of the year, the market has slowed down, there are more properties in the market that are great for buyers, and buyers have more leverage.” It is asking sellers to bear the cost of paying points to lower interest rates, the people said.

“If you’re going to negotiate a price down, let’s say you mark down your home by $10,000. $10,000 only equates to about $50 or $60 a month on your mortgage,” says Samsing. “But the same he applied $10,000 to the interest buydown would probably save him hundreds of dollars a month.” But when buyers buy their own points, a little more math is required.

Mortgage expert David Chan said, “The bank wants to take money from you over the long term at a higher interest rate, or to take money up front, but they want to cut your interest rate right from the start. I will.”for Ascent.

Here’s how it works: Points are equivalent to 1% of the loan amount. Points typically reduce interest rates by 0.25%. “That means that a $500,000 house will cost you $10,000 at 2 points and the interest rate will drop from 5% to 4.5%.”

Therefore, buyers should conduct a break-even analysis. “Am I going to stay in the house longer to get that money back? If the house is going to be in him for 30 years, it’s definitely worth it,” Chan said. “But a lot of times the rough break-even point was five to eight years for him. So if you don’t stay home longer than that, it doesn’t make sense to pay the points.”

Purchases of points are tax deductible like any other mortgage interest you pay, so the tax implications must also be considered.

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