Mortgage Broker License Number: MB2709

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Don’t Panic Over Interest Rates!!


For those of us, that have been in the mortgage lending business for a while we’ve seen all this before.

I know that every real estate market is different, but here is what I am seeing currently. About 50% of purchase agreements are under contract at or below the asking price, while 50% are under contract above the asking. That tells me that supply and demand are still more or less in balance. Keep in mind, we do business in eight states: CT, MA, RI, ME, NH, VT, NY and FL. The same percentages across the board.

Given the demand for housing is still there, my challenge as a mortgage broker is to secure my clients financing with monthly payments they can afford. There are many ways we can make home buying more accessible, even in a higher interest rate environment.

For example, over the past few months we’ve been offering what are called 2-1 buydowns, which can help borrowers handle monthly payments on loans with higher interest rates.

Here is how it works. If the current rate is 6%, in the first year the rate is calculated at 4%, the second year at 5% and remaining years will be at the 6%. This gives borrowers the chance to postpone the higher monthly payments that come with higher interest rates.

Let me explain the cost, let’s use a $300,000 loan:

  • At 6% the monthly payment is $1,798.65,
  • At 5% the monthly payment is $1,610.46, and
  • At 4% the monthly payment is $1,432.25

The cost for the buy down is $6,655, which is the difference in monthly payment.

For the last three transactions we did this way, the buyers-borrowers made it work for them. Two of these transactions worked because of a seller concession. In addition to helping the borrower make the monthly payments, 2-1 buydown

The 2-1 buydown can be done on any conventional, FHA, VA and USDA loan.

Feel free to communicate with me if you have any questions.

Right Trac Financial Group
110 Main Street
Manchester, CT 06042
Phone: (860) 647-7701

Right Trac Financial Group Trac Financial Group, Inc.
Mortgage Broker License Number: MB2709
Licensed in: Connecticut, Maine, Massachusetts, Florida, New York, Rhode Island, Vermont and Licensed by the New Hampshire Banking Department

Equal Housing Lender