Interest Rates & Getting Buyers Off the Fence "I'm waiting for interest rates to drop before I buy." We’ve all heard this from clients. And with the Fed expected to cut rates next week, it’s no surprise that many buyers are hesitating even though it will be uneventful. But here’s the real question: How much lower are they waiting for? Until prices start climbing again? Back into the 3s or 4s? We all remember what happened last time rates fell that low: home values skyrocketed. Will it happen again? Nobody knows. But waiting comes with a cost. Instead of sitting on the sidelines, buyers can act today using innovative mortgage strategies that lower their payment now and keep them flexible if rates fall later. The 1/0 Buydown Strategy I'm not usually a fan of telling clients to "pay points." But I love showing them how a 1/0 buydown or lender credit option can help them buy now, save money in year one, and refinance later if rates drop. Let’s walk through the numbers on a $1,000,000 purchase with 40% down and a $600,000 loan: Scenario 1: Standard Loan Rate: 6.125% Payment: $3,645/month No buydown, no credits, just today's rate. Scenario 2: 1/0 Lender Paid Buydown (No Points) Year 1 Rate: 5.375% = $3,359.83/month Years 2 - 30: 6.375% = $3,743.22/month If the buyer refinances after 7 months: Savings: $274.29/month during those 7 months Refund upon Refi: $1,920 in unused buydown funds The above is the "save me now and save me again later" option. Scenario 3: 1/0 lender Paid Buydown – with an extra credit Year 1 Rate: 5.50% = $3,406.73/month Years 2 - 30: 6.50% = $3,792.41/month The buyer also receives a $2,400 upfront credit (for closing costs, repairs, or pocket money). If they refinance after 7 months: They enjoyed lower payments for 7 months They receive a refund of ~$1,730 in unused buydown funds Net result: slightly higher long-term rate if they don't refinance, but immediate cash, lower year-one payments, and a refund if they refinance quickly Why This Works Buyers get payment relief now when they need it most. They can refinance later if rates drop and keep the savings. If rates don’t fall, they still have 12 months of lower payments, and in Scenario 3, upfront cash to work with This isn't about asking the seller for credits (though we love those too). It's about using lender options to structure a smarter loan today. Call to Action If you have clients waiting for rates to drop, flip the script: "If you’re confident rates will be lower next year, let’s structure your loan so you can take advantage of that today. You’ll get a rate that’s .75% lower for the first year, possible credits, and even a refund if you refinance early." Then tell them: “Call Mike Meena. He will walk you through the numbers, lay out the options, and help you make the best decision for today and tomorrow.” Please let me know if you have any questions or if a client needs my guidance. I’m just a call, text, or email away. 📞 Direct Line: 661-291-2222 – Text OK 📞 Cell: 661-714-6258 – Text OK 📞 Office: 661-260-2970 ext. 2222 – Text OK 📧 Email: Mike@AugustaFinancial.com But wait, there’s more… Interest Rates It has been a good week for rates, and I would love to see the momentum continue! Today ended flat and tomorrow is a big Friday! Loan Programs We do loans on Non-warrantable condos! We offer 12-day escrows for pre-approved buyers, including conventional FHA/Jumbo/Bridge loans. We provide loans in all 50 states, so call me with anything you need. Government loans (FHA/VA/USDA) are in the 5’s. Conventional loans up to $806,500 are in the high 5’s and low 6s. High-balance loans from $806,501 to $1,209,750 are also in the 6’s. Jumbo loans above $1,209,750 are in the 6’s. Bank statement loans are available with 10% down again, with larger down payments in the 6’s++. Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement! 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,300,000. Private Money lenders offer Hard Money Loans with 35% down. No-Ratio Loans require a 30% down payment. DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down. Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go! 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates! Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits. **Good News for Condos:** Vista Del Canon – No Longer Naughty! Princessa Estates – We have been informed that this is no longer considered a naughty condo, so we will categorize it as ‘buyer beware’. Valley Di Oro – We have been informed that this is no longer considered a naughty condo, so we will categorize it as ‘buyer beware’. **Bad News for Condos*** Seco Villas – Insurance Deductible is too high! Rainbow Sierra Terrace Owners – 19826 Sandpiper Place – Insurance coverage, Excess deductible American Beauty Village West – 26864 Claudette – Critical Repairs or Deferred Maintenance Issues. Also, insurance is an issue. Arbor Park – Critical repairs or Deferred Maintenance Issues Old Orchard Condos 23515 Lyons Ave – Unfunded repairs CONDO HELP!!! If you have a listing or a buyer interested in a specific condo and are unsure whether it is warrantable or Non-warrantable, please call me, and we can look up Fannie’s list in real-time. I have already done that on three condos today, and my list was accurate on all 3. We don’t know when something has changed, and it would be impossible to track everything on a day-by-day basis, but we don’t mind looking up a few items each day. The full state of California’s naughty list has been added to: MikeMeena.com! See the link below: https://mikemeena.com/non-warrantable-condos/ Let me know if you hear anything new about condos or townhouses. I am available every day if you need anything. 📞 Direct Line: 661-291-2222 – Text OK 📞 Cell: 661-714-6258 – Text OK 📞 Office: 661-260-2970 ext. 2222 – Text OK 📧 Email: Mike@AugustaFinancial.com Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow! Mike Meena President | Loan Officer Click to Call or Text: (661) 714-6258 This entry has 0 replies Comments are closed.
