Below Market Rate and Cash Reward Lock Strategy-“How it Works”

This program is a simple way to save thousands of dollars over the term of your loan- and it’s rarely offered by most lenders. Simply put, you:  a) use a lender approved “interested party contribution” to have the seller buy you into a below market interest rate and b) receive a comparable cash reward.

For example, If you have a loan amount of $250,000  you can lock in a below market interest rate using a seller paid down of 2% (or $5000). Therefore, YOU do not pay for it at closing. Then in 36 months, you’ll receive a cash reward of $5000 that you can keep or apply to your loan. see www.cashrewardsinc.com

By using this buy down technique, you reduce your interest rate by approximately .375% which saves you $60 per month on a $250,000 loan. If the cost of this buy down is $5000, then you earn that money back in 6.9 years (break- even point). All payments made after that point are pure savings to you.

HOWEVER, you also receive $5000 cash back in 36 months by redeeming the cash reward certificate that we present to you at closing! Therefore, you not only receive a TAX FREE cash reward equal to the seller buy down, you receive a tax deduction for the seller contribution that would offset your lender closing costs. ($5000x.25= $1250).  You now have a below market interest rate with no lender closing costs (in after tax dollars)!

In summary, this strategy provides a great savings opportunity by using all the parties in the transaction to lock in the lowest total cost over time: 1) the seller 2) the realtor 3) the federal government and 4) the lender. To discuss this and other often missed opportunities, please take a moment to call us.  And don’t forget to ask about the $25,000 mistake that “interest rate shoppers” make.