Smart sellers get creative with mortgage alternatives
After 20 months of gradual interest rate increases and rates reaching a 22-year high, many sellers are offering innovative strategies to make their properties more attractive. One of those plans is a 2-1 buydown, which offers a rate of 2% lower during the first year of the mortgage, then 1% lower the second year before settling on the market rate for the remainder of the loan. That worked for the first six or eight increases when rates were driven up as high as 6%, and those rates look good in the current market with rates running into the 7.67% range.
In the early days of the buydowns, there was confidence that interest rates would simmer over the ensuing two years, allowing a refinance at an attractive rate. That confidence has dissipated, and the prolonged death by 11 rate hikes is not here yet, but the market is in a coma. Read more...