Happy Friday!!
“What’s the interest rate on your current home?”
It’s a question I ask homeowners all the time, and I’d say 80% of them have no idea. Every once in a while someone fires right back, “2.625%!” like it’s a badge of honor, and rightfully so. But most people don’t remember their rate.
You know what they DO remember? Their payment.
I think we need to pay a lot more attention to that in this market. We’ve become completely fixated on interest rates. Is it 7%? Is it 7.5%? Are rates going up or coming down? Meanwhile, the buyer is usually asking a much simpler question: “What is my payment going to be?”
That’s where I see a massive opportunity right now.
For the buyers I see getting into contract or at least making offers,
I’m noticing two very different experiences right now.
In the first, the Realtor, the buyer, and I are talking before and during the offer. What payment are we trying to hit? How much can we get from the seller? Should we negotiate price or concessions, and what happens if we put those concessions toward the financing? Those buyers tend to get into contract much faster.
In the second, an offer gets written and I’m not really part of the strategy. Maybe I hear about it afterward. Then I get the call: “We didn’t get it.” Or I don’t hear anything at all, and three weeks later we’re still looking.
Buyers have leverage. Let’s use it.
This market gives buyers something incredibly valuable: LEVERAGE.
Sellers are negotiating and concessions are available. So instead of only asking how much we can get the seller to drop the price, I want us asking a better question: how can we use the seller’s money to create the payment this buyer actually wants? Maybe that’s a temporary buydown, maybe a permanent one. Maybe a price reduction really is the better move, or maybe it’s a combination. That’s exactly where I want to be involved.
Here’s what that looks like at today’s rates. On a $400,000 loan at 7.28%, a 2/1 buydown takes the payment from $2,737 down to $2,216 in year one. That’s over $500 a month, paid for with about $9,441 of the seller’s money. Not the buyer’s.
And what about rates?
The headlines are loud, and a lot of people are panicking. Let them. We’ve been here before.
Rates have topped 7% in every year since 2022, and in the fall of 2023 they hit 7.79%. Buyers kept buying anyway. And here’s the part nobody talks about.
By September 2024, rates had fallen to 6.08%, and this February they dipped below 6% for the first time since 2022. A buyer who closed at the 2023 peak and refinanced at that low saved about $484 a month on a $400,000 loan. No one can promise that happens again, but panic has never been a good strategy.
While everyone else panics, calmer heads prevail
The buyers who stay in the game right now are getting real advantages. They’re facing less competition, because every scary headline pushes more buyers to the sidelines. They’re meeting sellers who want deals done, with credits for buydowns and closing costs back on the table. And they’re buying with a plan for later. A fixed payment never rises. If rates ease, we look at refinancing. If they don’t, the payment still works.
So if we find the right house, negotiate aggressively, use concessions strategically and build a payment that works today, we can always revisit the financing if the market gives us the chance.
My challenge this Friday
Before you write your next offer, call me and give me five minutes. Tell me about the house, the offer, what you think we can negotiate and, most importantly, the payment you want. Let’s engineer the offer together.
Because you probably won’t remember whether we got 7.125% or 7.375%. On a $400,000 loan, that’s about $68 a month.
But I promise you, you will remember the payment,
Have a great weekend,
—Chris
The Lending Collective
Smart Mortgages. Better Prices. More Ways to Say Yes.
What’s Up With Rates?
These are the current national averages and we are .25%-.50% below these, especially with Jumbo and FHA/VA loans. Please inquire directly for exact quote**
Long-Term Mortgage Spread Chart (1970-2026):
10 Year Treasury Chart
10 Year Treasury Chart Time-stamped Friday @ 3:24 PM MST
Current Spread of 10 YR Treasury to 30 YR Fixed Rates is 2.13%. Still anticipating for this to revert back to long-term average of 1.5% – 1.8%(see charts above).
QUOTE OF THE WEEK:
“Don’t wait to buy real estate, buy real estate and wait.”
— Will Rogers
