Below is literally the conversation I had with a buyer, explaining to him that he can buy now and that interest rates don’t matter.
Buyer: I’m sorry Dan, at 7.5% I am out. The interest rate is just too high, and it doesn’t make financial sense for me.
Dan: I totally understand. What interest rate could you live with for a short period of time that would make sense and enable you to go forward and buy?
Buyer: Really nothing more than 6%; 6% interest would be my max.
Dan: OK, then let’s make the interest rate 6%.
Buyer: How are you going to do that?
Dan: We’re going to do it with the rate buy down. If the rate is 7.5%, we’re going to buy that down to 6%. That’ll make your monthly mortgage payment much more palatable.
Buyer: OK, but that sounds expensive.
Dan: It can be. But we’re only going to be doing it for a short time like maybe two years. Just trying to give us enough time for mortgage rates to correct themselves and get back into the fives.
Buyer: Well, if it is expensive, I’m not going to be able to shell out more cash from my pocket to do a rate buy down.
Dan: That’s OK, you don’t have to. You’re not going to pay for it. We’re going to get the money from the seller….
Buyer: Why would the seller do this? What’s in it for them? Is it going to cost me something to do the rate buy down? What happens at the end of two years? How much is a re-fi going to cost me?
If you’d like to know the answers to these questions and, as Paul Harvey used to say, “the rest of the story,” then give me a call at 808-987-3306. We are helping buyers who were previously out of the market and we’re bringing them back into the market, because we`re able to get them into an interest rate that makes sense for them to buy now.
Waiting for interest rates to come down a year from now is going to be a far more expensive proposition. The average appreciation here on the island is roughly 6%. So, buying a year from now at a purchase price 6% higher is far more expensive than a 6% or even a 7.5% interest rate.
Dan Polimino is the owner of the Hawai`i Team in Kailua-Kona, Hawai`i. He and his team are the luxury residential experts for the Big Island. If you are thinking about buying or selling inHawai`i, then please reach out to us at team@thehawaiiteam.com or call 808-913-0899.