While the houses are cold, some shop inside

As rising mortgage rates have affected home sales, many “Right city” – area that increased during disease thanks to the influx of remote workers – who are seeing their housing markets cool. This leads buyers to get creative and give buyers a little something to look for when looking for a home.

One new strategy involved: The mortgage “buydown,” which can help buyers negotiate a lower rate of less than 6% or 7% interest on most home loans today.

Taylor Marr, chief economist at Redfin, explained how it works on CBS News Mornings. In a “2-to-1” sale, a common arrangement, the customer can secure a lower price for the first two years of the loan by putting down additional funds.

“If you’re buying a $500,000 house, you can put down another $10,000 or $20,000 to pay off your mortgage,” he said. “If you get a 6% mortgage, for the first year you actually get 4%. Then it goes up to 5%, then 6%,” he said.

“It can be a great way to get a home if your income increases quickly. But you have to put money up front,” added Marr.

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Foreclosures are becoming more popular in some areas where home sales are slowing, but they’re just one of many competitors. a purchase can be made to attract an online transaction. Other sweeteners could include kicking in some money for improvements or offering to pay the buyer’s closing costs, Marr said.

In fact, sellers offered a record number of foreclosures in the last three months of 2022, according to Redfin data. About 42% of the company’s office sales included a concession, according to a recent announcement. report. Some buyers also have to drop prices outright, and Marr said about half of recent home sales have closed below asking price. .

Punishment is the most common in the West, found Redfin. Nearly three-quarters of San Diego malls received a foreclosure last quarter, followed by Phoenix, Portland, Las Vegas and Denver.

“The disease epidemic housing market was increased in many of these disease boomtowns mostly in the west,” said Marr. “The markets themselves cooled down quickly when (interest rates) went up, they’re doing more and more foreclosures so that buyers can buy a house.”

Mortgage rates are expected to nearly double in early 2022 as the Federal Reserve raises interest rates in its bid to lower rates. The move has added hundreds of dollars to home buyers’ average monthly payments and sold homes at their lowest point in the market. eight years.

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