Seller Credit Optimizer
2% of purchase price
Lender, title and escrow fees. Your lender's estimate is best.
Advanced
Price reduction
Price drops to $735,000.
- Month 1 payment
- $5,038
- Month 25+ payment
- $5,038
- Cash to close
- $15,000
- Total over 5 yrs
- $317,304
Temporary 1-0 buydown
Credit covers 87% of a 2-1. Consider a 1-0 buydown.
- Month 1 payment
- $4,649
- Month 25+ payment
- $5,138
- Cash to close
- $5,875
- Total over 5 yrs
- $308,302
- Buydown cost (seller-paid)
- $5,875
Permanent rate buydown
1.96 points buys the rate down to 5.886%.
- Month 1 payment
- $4,896
- Month 25+ payment
- $4,896
- Cash to close
- $15,000
- Total over 5 yrs
- $308,749
- Break-even
- 62 months
Credit to closing costs
Rate and price stay the same.
- Month 1 payment
- $5,138
- Month 25+ payment
- $5,138
- Cash to close
- $0.00
- Total over 5 yrs
- $308,302
If you keep this loan about 5 years, credit to closing costs saves you about $9,002 compared to price reduction.
How this works
Each option uses the same seller credit. Price reduction recomputes the loan, any VA funding fee and property tax on the lower price. The temporary buydown is paid by the seller from the credit: a 2-1 if the credit covers it, otherwise a 1-0, with any leftover going to your closing costs. The permanent buydown turns the credit into points at your lender's rate reduction per point. Credit to closing costs lowers your cash to close. Closing costs are estimated at 2% of the purchase price rather than a dollar quote, so your lender's estimate is always the number to trust. Totals add cash to close plus principal, interest, tax, insurance and HOA over the years you keep the loan. Mortgage insurance on conventional and FHA loans is not modeled.
Frequently asked questions
What's the difference between a 2-1 and a permanent buydown?
A 2-1 buydown lowers your rate by 2% in year 1 and 1% in year 2, then the payment returns to the note rate. A permanent buydown uses points to lower the rate for the life of the loan, so it only pays off if you keep the loan past the break-even.
Is a price cut ever better?
Sometimes. A lower price also lowers your loan, funding fee and property tax, and it can matter if you are short on down payment for a conventional loan. Over a short hold, though, a buydown or closing cost credit often saves more each month.
How much seller credit can a VA buyer get?
VA limits seller concessions to 4% of the home's value. Normal closing costs paid by the seller do not count toward that 4%, but things like temporary buydowns and paying off buyer debts do. Confirm what counts with your lender.
Do sellers on Oahu actually agree to this right now?
It depends on the home, the price range and how long it has been on the market. Homes that have sat longer are more open to credits. We can look at a specific listing with you and suggest what to ask for.
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