Nicole Friedman
speaker
798 appearances
16 recordings
1 series
first heard Aug 2017
last heard Dec 2024
Nicole Friedman’s voice in public audio — every appearance, attributed to the second.
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Appearances
WSJ Your Money Briefing · Some Homebuyers Turning to Buydowns for Lower Mortgage Rates · 20 Dec 2022
podcast
But right now, with rates so high, a lot of buyers are sitting on the sidelines.
They're much more nervous.
And so this is a way to kind of get that buyer to come back to the table.
And so often it is the lender or the builder or the home seller that is paying for this temporary buy down as a way to make that home purchase more attractive to a buyer at this time when demand is pretty low.
Yeah, a buyer who's interested in a temporary buy down, you know, it's certainly something to talk to their lender about.
As I said, it's often the lender themselves or the home seller, or if it's a newly built home, the home builder is the one offering that temporary buy down as a way to make the purchase more attractive to the buyer.
In these temporary buy downs, it's not that the interest rate is permanently lowered.
It's just that the buyer's payment is lowered for one or two or three years.
And so often it is the lender or the builder or the seller that will kind of pay the difference.
They'll put that money into an escrow account and that money will be used to pay the difference between the normal payment and the buyer's temporary lowered payment for however many years the buy down lasts.
Absolutely.
So the buyer going in does know that it's temporary and they know what rate and what payment they're going to have after the temporary buy-down ends.
And so they have been qualified at that higher payment.
They only get the loan if they're able to make that payment.
But of course, if the buyer is not budgeting with that in mind, if they maybe take on additional debt after buying the home, then maybe they could be in a situation once the temporary buy-down ends that they're not quite ready for that adjustment.
And some buyers who choose to do temporary buy downs are betting that they will be able to refinance, that interest rates will fall in the next one or two or three years, and they'll be able to lock in a new fixed interest rate that's lower.
Or they're betting that their incomes will increase so that by the time those normal higher payments start, they'll be in a better financial position to pay them.
The process of buying a home can be really expensive.
There's moving expenses.
You have to buy furniture.
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