In today’s economy, buying a home can feel like trying to sprint through molasses. Interest rates are hovering around 7 percent, home prices are still rising and inflation isn’t doing anyone any favors. Even folks with solid incomes are looking at their potential mortgage payments and thinking, “Yikes.”
It’s no surprise that people are saying things like, “I’m going to wait for rates to come down” or “I’ll wait for home prices to drop.” But here’s the thing: Unless there’s a major economic event that forces the Fed’s hand, interest rates probably aren’t heading south anytime soon. And with the cost of new construction still climbing, it’s unlikely home prices are going to take any dramatic dive either. Still planning to live with your parents? Yeah… I bet they’ve got thoughts on that, too.
The smarter approach isn’t to wait – it’s to negotiate.
Let’s say you’re pre-approved for a $525,000 home with 10 percent down. You might be thinking you’ll work with your Realtor to get the seller to knock $25,000 off the list price, bringing it down to $500,000. Your mortgage amount would be $450,000. At a 6.99-percent interest rate, that’s about $2,990 a month in principal and interest. Sounds like a win, right?
Maybe – but here’s what most buyers don’t consider: that $25,000 discount, spread across a 30-year loan, barely makes a dent in your monthly payment.
Now take that same $25,000 and use it to buy down your interest rate instead. Stay at the $525,000 purchase price but apply the credit toward loan points. With 10 percent down, your loan is $472,500. If you buy the rate down to 5.99 percent, your principal and interest drops to around $2,830/month. At 4.99 percent, it’s closer to $2,533/month. That’s real money saved every single month, not just a feel-good discount on paper.
And this is where having the right Realtor and lender team matters. Not just someone who opens a few doors and hopes you fall in love with granite counters. You need a Realtor who knows how to ask for the right concessions – and who can connect you with a lender who understands how to structure your financing like a strategy, not a sales pitch.
Because let’s be honest: This market isn’t easy, but it’s not impossible either. You just need to be willing to shop smart, negotiate hard and work with people who understand the difference between a transaction and a long-term financial decision.
Thank goodness there are mountain Realtors out there who are smart, sassy and savvy enough to help you pull it off. You just have to know where to look.
Theresa Grant is a real estate broker and columnist covering Lake Arrowhead, Crestline, Running Springs and the surrounding mountain communities. Reach her at (909) 442-1345, visit www.HomesInLakeArrowhead.com and follow her on social media, @theresagrantrealtor. Theresa is a Broker Associate with REAL Broker Technologies. DRE#01202881.
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