Buyers… Price Cut or Rate Buydown? How to Know Which Saves You More

Mortgage rates are over 7% now. If a seller offers to help, should you take a lower price or a lower rate?

Most buyers pick the price cut. It feels like the obvious win. But in today's market, it may NOT be the best deal for you.

Let me show you why... and how to check your own numbers in about two minutes.

Two ways a seller can help

A price cut lowers the price of the home. You borrow a little less. Your rate stays the same.

A rate buydown keeps the price the same. Instead, the seller pays your lender to lower your interest rate. This is called "buying points."

Both can save you money. The question is which saves you MORE.

A quick example

Let's say you're buying a $400,000 home with 20% down at a 7% rate. The seller offers $10,000.

With a $10,000 price cut, your payment drops by about $53 a month.

With a $10,000 rate buydown, your payment drops by about $159 a month.

That's about $106 more in your pocket every month with the buydown.

Price cut or rate buydown?

A seller offers to help you. Should that money lower the price, or lower your interest rate? Type in your numbers to see which saves you more, and when.

Try the Free Calculator

Opens in a new tab.

Here's the part that surprises most buyers

To get that same lower payment from a price cut alone, the seller would need to drop the price by almost $30,000. So in this case, $10,000 of rate help works like a $30,000 price cut.

So why doesn't everyone pick the buydown?

Because of the breakeven point.

A price cut gives you a head start. You bring less cash to closing, and you owe less on your loan. The buydown catches up a little each month through lower payments.

In our example, it takes about 5.4 years for the buydown to catch up. After that, it pulls ahead and stays ahead.

So the real question is simple: How long will you keep this loan?

Planning to stay 6+ years? The buydown likely wins.

Think you'll sell or refinance in a few years? The price cut likely wins.

Keep in mind... if rates drop and you refinance, the money spent on points is gone. A price cut stays with you.

Run YOUR numbers

Every buyer's situation is different. Your price, down payment, rate, and plans all change the answer.

That's why I built a free Price Cut or Rate Buydown Calculator. Type in your numbers and you'll see:

• Which choice saves you more, based on your plans
• Your exact breakeven point
• The price cut it would take to match the buydown
• A simple chart showing when the buydown pulls ahead

Price cut or rate buydown?

A seller offers to help you. Should that money lower the price, or lower your interest rate? Type in your numbers to see which saves you more, and when.

Try the Free Calculator

Opens in a new tab.

Let's make your offer work harder for you

Knowing what to ask for is half the battle. When we write your offer, I'll help you ask for the kind of seller help that fits YOUR goals.

Whether you're buying your first home, moving to Hamilton County, or right-sizing for your next chapter, I'm here to make it simple.

Let me know if you have any questions!