Anyone think this is useful? We offer a 2/1 buydown. If there is less and less room for negotiating the purchase price. A buyer can ask the seller as an alternative to pay approx. 1.8% of the purchase and buy down the rate 2%. This however is a temporary buydown. But has its benefits. For example, today's 30 year rate at 700k loan amount with 20% down is 6.625%. If the seller is willing to pay... [more]
Anyone think this is useful? We offer a 2/1 buydown. If there is less and less room for negotiating the purchase price. A buyer can ask the seller as an alternative to pay approx. 1.8% of the purchase and buy down the rate 2%. This however is a temporary buydown. But has its benefits.
For example, today's 30 year rate at 700k loan amount with 20% down is 6.625%. If the seller is willing to pay 1.8% to help buydown the rate, the buyer will get a rate of 4.625% and qualify their income using that rate. On the second year, the rate does up 1% to 5.625% and then on the 3rd year it caps off at 6.625%. (The original rate they would have received, so it isnt an ARM).
Basically, the seller is pre-paying the the mortgage for the buyer for the first 2 years.
The find that the best thing about this is that the buyer can use the 4.625% mortgage payment to qualify their income. In some cases, this may be the difference in qualifying and not qualifyling.
Anyone else think this can be useful?
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Response by eric_cartman
over 17 years ago
Posts: 300
Member since: Jun 2007
sure - if they only qualify using 4.625%, then it means they can only afford 4.625%. when their interest restes to 6.625%, they'll have to pay several hundred dlls more each month - which, by definition they couldnt afford, which will cause them to file bankruptcy, and put yet another house on the market in a place with a glut of inventory.
do you read news papers? isnt this what got us into this mess in the first place - giving loans using artificial teaser rates to those who wouldn't qualify at the full rate?
peddling this before crash was unethical. peddling this now - when everyone knows full ramifications - should just be plain illegal
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Response by duecescracked
over 17 years ago
Posts: 148
Member since: Dec 2007
shong you really need to stop posting on these forums. seriously man, do you not have any self-respect?
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Response by shong
over 17 years ago
Posts: 616
Member since: Apr 2008
I guess the answer is no...
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Response by shong
over 17 years ago
Posts: 616
Member since: Apr 2008
For arguments sake, if the seller was paying to buy the rate down for you, you wouldnt take it? Its a no brainer. If you got a mortgage today it would be i.e. 6.625% anyway. And you know its not going to be any higher than the lowest rate you wouldve received at the current market. I understand where youre coming from but for the short term you can save some cash, youd take it too.
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Response by West81st
over 17 years ago
Posts: 5564
Member since: Jan 2008
Extremely useful... for duping borrowers and rating agencies, which is what Countrywide does best.
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Response by Amity95
over 17 years ago
Posts: 145
Member since: Dec 2007
shong = sheister
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Response by shong
over 17 years ago
Posts: 616
Member since: Apr 2008
Thanks for all your positive input.
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Response by gbb
over 17 years ago
Posts: 9
Member since: Dec 2007
.
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Response by West81st
over 17 years ago
Posts: 5564
Member since: Jan 2008
A teaser is a teaser. Call it a "buydown" if you like; it's still a teaser - just a teaser that the buyer pays for in the form of a higher purchase price. And don't get me started on Countrywide's fees.
I packaged your firm's crappy loans for securitization, probably before you learned to spell ARM. You work for the Devil. That's OK - everybody needs to make a living. But don't expect hospitality when you show up selling Angelo Mozilo's toxic crack on a public board.
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Response by girlygirl77
over 17 years ago
Posts: 164
Member since: Feb 2008
The income should be qualified using the higher/cap 6.625%, then this would be ok. Considering what is going on now, there is no justification for qualifying someone for the lower amount. Ridiculous!
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sure - if they only qualify using 4.625%, then it means they can only afford 4.625%. when their interest restes to 6.625%, they'll have to pay several hundred dlls more each month - which, by definition they couldnt afford, which will cause them to file bankruptcy, and put yet another house on the market in a place with a glut of inventory.
do you read news papers? isnt this what got us into this mess in the first place - giving loans using artificial teaser rates to those who wouldn't qualify at the full rate?
peddling this before crash was unethical. peddling this now - when everyone knows full ramifications - should just be plain illegal
shong you really need to stop posting on these forums. seriously man, do you not have any self-respect?
I guess the answer is no...
For arguments sake, if the seller was paying to buy the rate down for you, you wouldnt take it? Its a no brainer. If you got a mortgage today it would be i.e. 6.625% anyway. And you know its not going to be any higher than the lowest rate you wouldve received at the current market. I understand where youre coming from but for the short term you can save some cash, youd take it too.
Extremely useful... for duping borrowers and rating agencies, which is what Countrywide does best.
shong = sheister
Thanks for all your positive input.
.
A teaser is a teaser. Call it a "buydown" if you like; it's still a teaser - just a teaser that the buyer pays for in the form of a higher purchase price. And don't get me started on Countrywide's fees.
I packaged your firm's crappy loans for securitization, probably before you learned to spell ARM. You work for the Devil. That's OK - everybody needs to make a living. But don't expect hospitality when you show up selling Angelo Mozilo's toxic crack on a public board.
The income should be qualified using the higher/cap 6.625%, then this would be ok. Considering what is going on now, there is no justification for qualifying someone for the lower amount. Ridiculous!