Okay, so yesterday I posted a link to an article on how to sell your home in a buyer’s market.

One suggestion: pay the discount points on your buyer’s mortgage loan.

I was confused, however (even though I didn’t say so, at the time).

I couldn’t see how paying the discount points benefited the seller, at all.

Today, Holden Lewis of Bankrate.com clarifies his reasoning (while giving a shout out to me):

(P)aying discount points (instead of dropping the price) addresses the seller’s emotional needs. Sellers sometimes get hung up on price. They say they won’t go any lower, and then they realize that maybe they do need to go lower, but pride gets in the way. By paying discount points, they can save face.

(Further), if the buyer makes a substantial down payment, the seller shells out less in points than in an equivalent percentage drop in price. If the buyer is making a down payment of 20 percent and getting a loan for 80 percent of the purchase price, a 3 percent reduction of the price equals 3 percent of the price, but 3 discount points equals 2.4 percent of the home’s price.

Read his article to find out about the additional benefits, to the buyer.

Complete article: Mortgage Matters – by Holden Lewis, Bankrate.com

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Updated: January 2018

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