Equity Reach Arroyo Grande, California

Interest Rate Buy Down

Reduction In Price Or Permanent Interest Rate Buy Down

  3% Reduction in Price  (21,000)

700,000 purchase price                       79,000 purchase price

   70,000 (10%) down payment              67,900 (10%) down payment

  630,000 loan amount                           611,100 loan amount

630,000 @ 6.25%    P&I = 3,879    611,100 @ 6.25%   P&I = 3,762 

Monthly savings = $117

Interest Rate Buy Down  (21,000 / 3% discount points)

700,000 purchase price

  70,000 (10%) down payment

630,000 loan amount

630,000 @ 5.25%    P&I = 3,478

Monthly savings compared to reduction in price = $284

Yearly savings =  $3,408

5 year savings =  $17,040

10 year savings = $34,080

20 year savings = $68,160

30 year savings = $102,240

Equity Reach Mortgage Solutions

Temporary Interest Rate Buydowns: How to Use to Sell OR to Purchase a Home 

A temporary interest rate buy down occurs when funds are set aside by a third party to subsidize the borrowers’ payment in the early years of the mortgage.


Sellers – Houses sell much faster by advertising* lower initial interest rates.

Sellers – Home can sell for full price by advertising* lower initial interest payments.

Sellers – More buyers qualify.

Sellers – More buyers are interested.

Sellers – Advertise* and show borrowers how they save money on their monthly payment.

Buyers – Lower Initial Payments, gradually increase to the full interest rate

Buyers – No negative amortization (balance doesn’t increase)

Buyers – No risk of changing interest rates or unknown payments

All – Keep home values in the area stable.  Keeping the sales prices stable helps the entire economy

It’s good for the Sellers, the Buyers, the Realtors®, and the economy.  Selling houses at full price by offering a REAL reduced interest rate and lower initial payments to the borrowers helps everyone.

Seller Carry Back Options

Equity Reach Mortgage Solutions

Will Show You

How Seller Seconds Can Help Your Listings

Sell Quicker AND How You Can Qualify More Buyers! 

Have you ever heard the saying “What’s old—is new?” I want to share with you how seller-seconds (or they might be called “carry-backs”, junior liens) can save deals!  You can’t do it every time because the seller or builder must have equity in the property – but if they do – it’s a great tool.   It not only helps sell the house, but they end up with an excellent return on their “secured” investment, and a nice tidy income stream.

Now for the buyer– if you work the numbers, it’s usually cheaper for your client to make the combined payment as opposed to paying MI.


Property can be advertised as low-down payment with NO mortgage insurance

More borrowers qualify who may not qualify for MI due to credit scores

Advertise and show borrowers how they save money on their monthly payment

Less down payment for properties in declining areas

The Seller/Builder can get their sales price instead of letting the house sit on the market

Seller/Builder end up with an excellent return on their low-risk investment (secured against real estate), and a nice monthly income stream.

Borrower Qualifying – Payment from seller carry-back must be included in borrower’s qualify ratios

“Carry-Back” Second Mortgage Requirements –


Must permit prepayment at any time without penalty

No balloon in less than 5 years (exceptions for borrowers with very high cash reserves)

Payments Monthly: Requires regular payments

Payments must cover interest due at a minimum

No negative amortization

Rate on Second: Rate must be market:

No more than 2% less than posted net yield for Fannie Mae seconds at time transaction is closed

Fixed or per ARM requirements

Adjustable Rate Second:

Rate cannot adjust more than once a year

Payment must cover interest due at a minimum

Disclosure:  Terms must be fully disclosed to appraiser and lender

      No Wraparounds: No combination of first with second in a wrap


$500,000 SP, Primary Residence, 700 FICO

All rates and terms of seller second are approximates & for illustration purposes only

With Seller Carry Back

80% 1st =               $400,000               5.75% (30 year conforming)  $2,334.00

15% 2nd =              $75,000                       4% (30 due in 10/Interest Only)  250.00**

5% down =            $25,000                 Total Borrower Payment –   $2,584.00

**Seller’s Income Stream is $250 monthly, 4% return on investment, gets closer to asking price, fully secured against real estate and makes property more marketable/attractive!

With NO Seller Carry Back

95% 1st =               $475,000               5.75% (30 year conforming) $2,772.00

MI* (MGIC)         25% coverage             Rate – .0075                                 $297.00

5% down =            $25,000                 Total Borrower Payment    $3,069.00

Seller Carry Back strategy saves the buyer $485 per month and creates a $250 monthly income stream for the seller!

Mark Frassica
Mortgage & Franchise         Consultant NMLS # 234713
Office: 805-202-2100Cell: 805-440-8173

Harry Bennett Jr  Mortgage Advisor  NMLS # 1973490 
Office: 805-202-2100  Cell: 805-459-7601    
Equity Reach Mortgage Solutions Division of Golden Empire Mortgage, Inc.
567 Camino Mercado, Suite C, Arroyo Grande. CA 93420

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