Paying Points to the Bank
Sellers can offer to pay mortgage points for a buyer, an incentive that realtors tends to use in environments like today's, when rising interest rates are at the front of a buyer's mind. One point is 1% of the loan amount, charged as prepaid interest.
"When a buyer sees a lower interest rate or monthly payment, that's something they can relate to," he says.
The setup makes sense for a buyer who has to buy furnishings for the new place; it also can make for an easier monthly payment transition for families that are upsizing.
Buyers should understand, however, that the lower rate often lasts only from one to three years.
Before accepting, understand and plan for the point in time when the mortgage bill will increase.
