Posted on: 04th Jun, 2009 09:20 pm
Hi,
I am planning to give offer of 650k to one home.
I checked with one of the lender and came to know that instead of giveing offer of 650K if I give offer of 655K and ask seller to pay 5K towards closing cost then it would bring down loan interest rate for me?Is is true?If yes then does interest rate gets reduced by huge difference?Please advice.
Thanks,Andy
I am planning to give offer of 650k to one home.
I checked with one of the lender and came to know that instead of giveing offer of 650K if I give offer of 655K and ask seller to pay 5K towards closing cost then it would bring down loan interest rate for me?Is is true?If yes then does interest rate gets reduced by huge difference?Please advice.
Thanks,Andy
It sounds like the lender is offering you to get the $5k from seller to buy down your interest rate. Depending on the amount of money you're borrowing, this may bring your rate down atleast an additional .25% - .375%. I hope this helps...
i suppose that's a possibility here, james, but $5000 isn't going to make much of a dent when you consider the price range andy is talking about (unless he's got a major down payment).
if it is, in fact, a buydown of the rate that would take place, it's not a bad idea at all, in my view. if it's for the purpose of reducing closing costs, i have to question it, since it would appear that in that price range, costs would be substantially higher and $5000 wouldn't make much of dent in that either.
if it is, in fact, a buydown of the rate that would take place, it's not a bad idea at all, in my view. if it's for the purpose of reducing closing costs, i have to question it, since it would appear that in that price range, costs would be substantially higher and $5000 wouldn't make much of dent in that either.
Hi James ,George
Thanks for your reply.I really appreciate it.
I am putting down payment of 10% in this case.
So will it help to reduce interest rate if
1) I put more down payment (may be 15% instead of 10%)
2) I ask seller to pay more amt towards closing cost?
Thanks in advance.
Andy.
Thanks for your reply.I really appreciate it.
I am putting down payment of 10% in this case.
So will it help to reduce interest rate if
1) I put more down payment (may be 15% instead of 10%)
2) I ask seller to pay more amt towards closing cost?
Thanks in advance.
Andy.
your down payment on the transaction will generally have minimal effect on the rate you pay (unless you are making the jump from, say 10% down to 15% down, or 15% to 20%). if you were to use seller-paid fees to buy down the rate, that's specific to the rate, yes.
your credit score has the greater impact on your rate.
your credit score has the greater impact on your rate.