Maximize the Value of Your Offer

Mortgage Money is still readily available!

When negotiating a purchase, instead of asking for a reduction in sales price, consider asking for that money in seller concessions. It is a wash either way for the seller, and it could save you considerable money on your monthly payment.

Let’s assume a $250,000 listing price, 20% down payment and a 30 year fixed conforming mortgage.  Here is how the difference breaks out for you as a buyer:

If you negotiate the sales price down 10,000, your new sales price would be $240,000 and your loan amount at 80% would be $192,000. At a 5% rate your principal and interest would be about $1030 a month. However, if you kept the sales price at $250,000 you could use that $10,000 to easily cover the cost to buy your rate down to 4.25% and have a principal and interest payment of about $983 a month and have some left over to cover some closing costs.  The seller probably feels better about getting a full price offer and you save on your monthly payment.

Depending on your specific situation, there are solutions to make your mortgage work for you.  So, the bottom line is, make sure you cover all options with your mortgage representative and be pre-approved before you make an offer on your house. This will allow you to maximize your negotiating ability in this market!