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Seller Credits and Mortgage Buydowns: Options for Higher Rates

A rate being historically familiar does not make the payment comfortable. In this video, Eric explains why buyers should compare a seller credit, discount points and a temporary buydown before making an offer.

By Eric Hamilton · Published October 6, 2026

Originally uploaded September 24, 2026 · 3:28 · Watch on YouTube

Written companion added October 6, 2026. Adapted from Eric’s video captions with source checks; not a word for word transcript. The recording retains its original date.

Start with the pressure on your household

Is the obstacle the cash needed to close, the ongoing monthly payment, or both? A credit toward eligible closing costs can preserve savings. Discount points may reduce the rate for the life of that loan. A temporary buydown can ease the first payments, but the full scheduled payment still matters. A lower purchase price changes the purchase amount and borrowing need. Ask for all options using the same property and down payment approach.

Read the 3% example as a strategy, not a quote

Eric describes a buyer who negotiated a 3% seller contribution and used it to obtain a lower rate. That does not mean a 3% credit produces the same rate reduction for every buyer. The permitted credit depends on the loan and transaction; the rate reduction depends on actual lender pricing. Under Fannie Mae rules, seller financing contributions cannot fund the buyer's down payment or required reserves. Verify eligible costs before requesting the credit.

Ask how long the benefit lasts

For discount points, compare the upfront cost with monthly savings and how long you realistically expect to keep the mortgage. A simple cost divided by monthly savings calculation is a starting point, not a complete return calculation. For a 2-1 buydown, review each payment stage and the full payment after the subsidy ends. For applicable Fannie Mae loans, qualification uses the note rate. Build a plan that works without assuming a refinance.

Make the offer with a clear comparison

Ask your lender and agent for a side by side estimate of cash to close, monthly payment and total concession requested. Keeping more savings may matter more than obtaining the lowest advertised rate. If none of the choices leaves a comfortable budget, waiting is a valid outcome.

Does one discount point always lower the rate by the same amount?

No. A point is a cost equal to 1% of the loan amount. The rate reduction varies with the loan, lender and market pricing.

Does a 2-1 buydown permanently change my mortgage rate?

No. It temporarily subsidizes payments under its agreement. Review the full note payment and do not assume refinancing will be available later.

Sources and scope

The original recording discusses a particular borrower and market period. Its rate levels, savings and negotiation conditions are not current offers or promised results.

  1. CFPB: How points and lender credits work Accessed October 6, 2026
  2. Fannie Mae: Interested party contributions Accessed October 6, 2026
  3. Fannie Mae: Temporary interest rate buydowns Accessed October 6, 2026

General education, not a loan quote, approval or an individual recommendation. Ask the appropriate professional about your situation.

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