Warming up for your first deal of 2023? Want to feel in control of the buying process? Read below for some key answers about the trajectory of interest rates and creative financing terms that might just help you land a deal that you feel solid about!
What is the trajectory of interest rates in the next six months?
It is impossible to predict the exact trajectory of interest rates in the next six months with certainty. Factors such as economic growth, inflation, and Federal Reserve policy will all influence how interest rates will change. It is likely, however, that interest rates will remain low in the near future, although there could be some modest fluctuations over the coming months.
What are lender credits?
Lender credits are a form of compensation that lenders give to borrowers in exchange for agreeing to a particular loan. This compensation can take the form of a lower interest rate, a lower down payment, or other types of incentives. Lender credits can be beneficial to borrowers by providing them with a lower cost of borrowing and can be beneficial to lenders by incentivizing borrowers to take out loans.
What are points?
Points are a form of upfront payment made by a borrower to the lender for a loan. Points are usually expressed as a percentage of the loan amount and can be used to buy down the interest rate or reduce closing costs. Points are typically paid at the time of closing and the amount paid can vary depending on the size of the loan and the terms of the loan agreement.
What are temporary buydowns?
A temporary buydown is a loan modification technique that can be used to lower a borrower’s monthly payments for a set period of time. This is usually done by paying a lump sum up front to the lender, which is then used to reduce the interest rate for the duration of the buydown period. After the buydown period is over, the borrower’s payments will return to their original amount. A temporary buydown can be beneficial for borrowers who need to reduce their monthly payments for a short period of time.
What is a 2:1 buydown?
A 2:1 buydown is a loan modification technique in which the borrower pays a lump sum to the lender in order to reduce their interest rate for two years. After the two-year period is over, the borrower’s payments will return to their original amount. This buydown technique can be beneficial for borrowers who need to reduce their monthly payments for a short period of time.
What are seller concessions?
Seller concessions are incentives that the seller offers to the buyer in order to make the purchase of a property more attractive. These concessions can take the form of a lower sales price, closing costs, or other incentives. Seller concessions can be beneficial to buyers by reducing the overall cost of purchasing a property.
What are third party contributions?
Third party contributions are funds that are contributed by someone other than the borrower or lender to help cover the cost of a loan. These contributions may come from family members, employers, or other organizations and can be used to cover the down payment, closing costs, or other expenses associated with a loan.
Are there limits to seller concessions?
Yes, there are limits to seller concessions. The limits vary by loan type and can be determined by the lender. Generally, seller concessions are limited to a percentage of the purchase price, and any amount that is above the limit must be paid for by the borrower. It is important to consult with your lender to determine the exact limits for seller concessions.
If you want to learn more about how to take advantage of some of the creative financing options mentioned above, reach out to a member of The FI Team and we’ll set you up with a lender to best educate you on how to make your next deal happen!
