9 Tactics for Home Buyers Grappling With High Mortgage Rates

With mortgage rates at 20-year highs, home buyers can use these tactics to make their dollars go further.

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Published · 5 min read
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Written by Holden Lewis
Senior Writer/Spokesperson
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Edited by Mary Makarushka
Assigning Editor

Mortgage rates have risen to their highest levels in more than 20 years, making it harder to afford a home. And yet, out of necessity or desire, hundreds of thousands of people buy homes every month.

With the 30-year fixed rate topping 7%, NerdWallet asked real estate agents and mortgage loan officers for advice on how home buyers can stretch their homebuying dollars in this time of high interest rates. Here are nine tactics that they suggested.

1. Ask the seller to reduce the mortgage rate

Temporary mortgage rate buydowns have become commonplace since rates surged in early 2022. With a temporary rate buydown, the seller pays a portion of the buyer's interest payments upfront. This reduces the house payments for the first one, two or three years of ownership.

"This is a common strategy for new-home builders, but it can also be used in the purchase of resale homes," said John Bianchi, executive vice president for loanDepot. (All sources in this story commented via email.) "Negotiating a temporary buydown with the seller can help soften the blow of high interest rates, reducing your monthly payment for one to three years."

In one typical setup, the seller's payment effectively cuts the buyer's interest rate by 2 percentage points in the first year, and by 1 percentage point in the second year. After that, the buyer pays the full interest rate. This is known as a 2-1 buydown.

Another option is to reduce the mortgage rate permanently, using discount points. One discount point equals 1% of the loan amount; each point typically reduces the interest rate by around 0.25 percentage point.

"Home buyers have an opportunity to get a seller to pay for these methods to lower their interest rate," said Chuck Vander Stelt, a real estate agent in Valparaiso, Indiana. "Some home buyers should seriously consider offering a more generous price to the seller in exchange for a large closing cost concession and then use those funds to buy down the interest rate as much as possible."

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