Hey guys, have you ever heard of a blended interest rate?
A blended interest rate is gonna become really important to a lot of us selling real estate in the coming months and years as these high interest rates stick with us.
So here's what a blended interest rate is:
Imagine a buyer has a budget, and they're gonna go out and buy, let's say, a $700,000 house. They have $100,000 down, and now they have $600,000 they're gonna finance. But they can't quite swing the high interest rates that are out there today. It's just gonna put 'em in a place where they can't afford it.
But they're willing to be creative and if you have a seller that's going to be creative, you can still put this deal together.
So here's an example:
Let's say that they were able to go out and get a first mortgage for $400,000 at the current interest rate. Let's call that 7.5%, which is probably where it's headed pretty quick. And the seller was willing to carry a second on the property of $200,000. And yes, we know there's some risks associated with that, but let's assume that they're okay with doing it. And they're willing to come down on the interest down of 4.5%.
When we blend these two interest rates together, proportionally, you can figure out pretty quickly that the blended interest rate comes down to 6.5%. Much more attractive than the 7.5% that they're paying if they were to finance the whole entire thing.
If you have a seller that's willing to be creative and carry a second, and they're willing to do a little bit of a discount on the interest rate, you can create a blended rate for a buyer that makes your house stand out in the marketplace.
And believe me, we need that when more and more inventory is piling on the market every single day.
So think about having that conversation with sellers about offering to carry a contract and what a blended interest rate looks like.
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