Homeownership tools

Seller Credit vs. Price Reduction

Compare two common negotiations side by side.

Home price

Down payment

Interest rate

Loan term

years

Amount being negotiated

Price reduction

Seller lowers the price instead of offering cash back.

Cash needed at closing$78,000Loan amount$312,000Rate6.500%Monthly P&I$1,972

Seller credit (rate buydown)

Same dollar amount, used to buy down the rate instead.

Cash needed at closing$80,000Loan amount$320,000Rate5.719%Monthly P&I$1,861

The price reduction needs $2,000 less cash at closing. The rate buydown saves $111 more per month. Which matters more depends on whether cash on hand or monthly budget is the tighter constraint.

The rate buydown side assumes 1 discount point (1% of the loan) buys about a 0.25 percentage-point rate reduction, a common rule of thumb that varies by lender and market conditions. This is a planning estimate, not a loan offer.

Success Mortgage Partners, Inc. supports Equal Housing Opportunity. NMLS ID# 130562. This is informational only and is not an offer of credit or commitment to lend. Interest rates, products, and loan terms are subject to change without notice and may not be available at the time of loan application or loan lock-in. Contact Success Mortgage Partners, Inc. to learn more about your eligibility for its mortgage products. Loans are subject to buyer and property qualification. Cash reserves may be required. Success Mortgage Partners, Inc. is not acting on behalf of or at the direction of HUD/FHA or the Federal Government.

This is not intended as an advertisement of current Interest Rates or Annual Percentage Rates "APR" as defined by Regulation Z. These rates/costs are provided for demonstration purposes only. These rates/costs are estimates and are subject to change. Not all borrowers qualify for all programs at the advertised rates.