Lennar offering 4.875% fixed rate 30-year mortgage

NEW -> Contingent Buyer Assistance Program
I wonder if anyone will qualify?

I wonder how big of a discount Lennar will be forced to take to sell this loan in the secondary market?
 
IR

They pay up front with discount points from prevailing at lock in or they bought a future committment which is where Lenar pays upfront discount points wheather they use the funds or not.

Of course more people will qualify at 4.875 than 5.5 or 6%

It used to be about 6 points per 1 point of buydown. Keep in mind that is a percent of loan amount not sales price. Builders sometimes have to purchase a committment for a portion of sales to get construction financing as a hedge against rising rates. I would think this is to help more people qualify as the buyer is quailfied on the bought down rate on a full 30 year BD. It is better than granite, options, or closing costs as it allows a wider range of people to qualify for your product against builders who aren't doing a BD.

Regards
 
They are doing this in Florida also. Saw an ad last week where a smallish condo (1350 square feet maybe?) was being sold with this low rate. In low wage Florida, an actual first time buyer could actually afford this. I wonder how much money they are losing.
 
Lee Homes is doing the same deal for their harbor lofts project in anaheim as a grand opening special, whatever that means. plus 2 years hoa
 
LM

You know that buying down the rate allows more people to qualify than lowering the price. Not "trickery" but more like opening the product to a wider range of potential buyers.

Its a numbers game and the seller gains more qualified potential buyers with the same net cost af sales.

Regards
 
Price matters more than interest rate. The buyer would be better off with a lower priced home, and paying less points themselves. Smaller purchase price + same dollar amount of downpayment = lower LTV. A lower LTV may allow for a better rate by itself.

The benefit of paying points decreases with every additional buy-down. Say your 30 year fixed is 6.0% with no points. It will cost you 3/4th of a point to reduce the rate to 5.75%. That's 3/4 a point in fees for a 1/4 point rate reduction. Now to reduce the rate from 5.75% to 5.5% will cost more than an additional 3/4th of a point in fees. A 2.75% point buy-down would only get you down to about 5.25% on a 30 year fixed rate.

In addition, you can immediately deduct points paid from your income taxes if you pay them out of pocket, not if they are rolled into the loan.
 
"Plus, you are paying property taxes on the additional amount for as long as you own the house."

Nah, IR, you can just get your re-assessed at a lower value once the place declines another 20% in price. You don't necessarily have to pay more prop taxes than the guy who waited and bought the same house for cheaper later...

http://www.oc.ca.gov/assessor/pdf/Prop_8_Value_Decline.pdf

Then again, once the home price recovers, you would be slammed with a big prop tax increase and the bottom guy will still have his 2% limit...
 
Oh I'm sure OC and LA will get right on your request for a reassessment of lower value. this will be top priority for counties that are getting more and more cash strapped. I bet they will make you jump through hoops and tread through hell and high water.
 
Is it difficult to get a home "reassessed" at a lower value? If it is, maybe the county should be involved to begin with - when giving a property valuation for the purpose of securing a mortgage...
 
The small cheap Florida condo in the space coast was only $139,000. I consider that a reasonable price. P & I with I think 20% down, was about $660. Taxes, and assn fees, which includes building insurance would take it up maybe anyother $400.

Quite close to being affordable.

In Florida, you pay 15 bucks, and get a hearing scheduled on the value and take an appraiser or realtor (!) with you or some comps, and they often do reduce the taxes.

I'm advising ALL my clients to file for reduction next Sept. They only give you a 2-3 week period to file in hopes nobody will.

The local govt entites are going to be dying a year from now.
 
You must log in or register to reply here.
Back
Top