Buydown

  

Mortgages can be written with a buydown as part of the financing. This involves the seller helping the buyer to lower the interest rates for a period of years, or even the whole loan.

To do this, the seller puts money into escrow to make payments alongside the buyer, and lower the buyer's portion of payments. It can be done as a way to sweeten the deal on a hard-to-sell home, or in a slow real estate market. This method lowers the buyer's monthly payment, which makes it easier for the buyer to qualify for the loan.

Say you're selling a fixer-upper, and the only interested party is this sweet young couple, long on dreams...but short on qualifying work history to get approved for the mortgage.

You as the seller can put money into escrow to make the payments more manageable for them, and entice the bank into making the loan. It might cost you to do this, but it might be preferable to being stuck with a house you can't sell.

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Finance: What is a Reverse Mortgage?6 Views

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Finance allah shmoop What is a reverse mortgage All right

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people let's start with a normal mortgage You put one

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hundred grand down borrow three hundred grand and are the

00:12

proud new owner of this baby in palo alto california

00:15

You make payments for thirty years at five percent interest

00:18

and then you retire their debt free So that's a

00:21

mortgage but what's a reverse mortgage Like one of these

00:25

egg trump Well kind of at least financially the payments

00:29

go in the opposite direction of a normal mortgage Like

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you're old you just want to live out your remaining

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years with the basic comforts Shower seats stair lift high

00:39

absorption adult diapers You own all of your home No

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mortgage on it You paid it all off The home

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is now worth a million box Nice shoebox There you

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can do a reverse mortgage pledging your home is an

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asset and basically just receiving a payment of l say

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five grand a month from that reverse mortgage and you'll

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get to deduct interest costs as you go Justus if

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it were a normal mortgage well after forty months you

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you know croak in that time period you've taken out

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Forty times five grand or two hundred grand in loans

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plus some interest and you sell your home for a

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cool million Rather your heirs dio So what happens now

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Well they just take the million bucks from the sale

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write a check for two hundred grand and change to

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the bank to pay off the reverse mortgage that you

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had accrued while you were you know wasting away to

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nothing and your heirs end up happy like they miss

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you But you know a free stair lift Who are 00:01:37.997 --> [endTime] you

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