Tony and Ida were looking to buy their dream home. They found the perfect home with the perfect location but their interest rate was keeping them from closing the deal. They reached out to Hill Mortgage for a unique solution to this problem.
Challenge
Tony and Ida wanted to purchase a $925k home with a $350k down payment but needed to keep their monthly PITI (principal, interest, taxes, and insurance) payment as close to $4k as possible. Their available 7.5% interest rate pushed their monthly payment to $4,905, which was beyond their budget.
Solution
After consulting with Jason Hill of Hill Mortgage, a rate buy-down was identified as the ideal solution. Here’s how it worked:
- Reassess the Home Value: The seller had recently reduced the price of the home by $50k. However, after talking to the buyer’s agent, Tony and Ida felt the value of the home could justify a purchase price of $975k.
- Buy Down Interest Rate: To make this large purchase more affordable, Tony and Ida asked the seller to contribute $58,500 towards buying down their interest rate.
- Closing the Deal: This strategy reduced their interest rate to 4.875%, bringing their monthly payment down to $4,114.
Outcome
Even though Tony and Ida paid $50k more for the house, this tailored solution saved them $791 per month, allowing them to keep their dream home within their budget and feel confident they made the right choice.