Creating More Business from Realtors^TM and Builders Using Temporary Buydowns
(Part One)

Written By: Karen Deis

Many loan officers who have been in the business 3 years or less, may not be familiar with the term "temporary buy downs". Those of you who have been in the mortgage business for a while - well, this might be the perfect time to REVISIT them and create mortgage opportunities before your competitors jump on the "buy down bandwagon".

Let me start with a story!

I received a call a few weeks ago from a loan officer who wanted to "stage" a home sellers' rally with his select group of real estate agents. The plan was to hold a "weekend sell-a-thon" where home sellers would drastically reduce the listing price of their homes - but only for a 3-day time period (kind of like a car dealer who offers discounts and rebates).

The proposal would be for the sellers to reduce the price by either advertising a percentage off the sales price (8% for example) - or a flat dollar amount ($5,000 for example). However, looking at the transaction from a potential buyer's point of view, a $5,000 reduction in the sales price only makes a difference of $31 in a monthly payment (6.5%, 30-year fixed).

Homebuyers are initially concerned about 2 things -

1. How much cash will they need for the down payment and closing costs?
2. How much money will they have to allocate from each paycheck for their mortgage payment?

A $31 difference is basically one night out at McDonalds for a family of 4.

I suggested that instead of reducing the listing price of the homes, that the sellers offer to provide a 2-year, TEMPORARY BUYDOWN where the payment would be reduced a whopping $251 for the 1^st year of the loan. ($251 versus $31? What's not to like?)

In Part Two of this article, we will show you how to SELL the program to homebuyers, FSBO sellers, listing agents and builders. If you're not yet a subscriber, Subscribe now for $119 (24 Issues), and receive a free DVD by internationally acclaimed businesss author, Harry Beckwith!

Read this article to learn exactly how a temporary buy down works; what happens to the funds; how you can figure it out yourself; APR disclosures and creative buydown options.