What’s The Difference Between Rate Reductions Vs. Price Reductions?

I recently received a short excerpt from Brad Roche a business friend and client of mine, and I thought it was worth sharing. ~ Sara

Rate Vs. Price Reductions

Everyone wants to get the best deal when buying a home. However, for potential buyers who are waiting to see if home prices come down a little more, the wait could cost them.

Let’s look at an example to see why. br

Say a homebuyer wants to buy a home that costs $300,000, but the buyer wants a better deal on the home. So, she delays a transaction until the home is reduced by $10,000. She also plans to finance 90% of the purchase price. What would happen if rates increased during her waiting period?

As she waited for the price to reduce, rates rose to .75% to 6.00%. She would end up having total payments over $35,000 more than paying the $300,000 purchase price on a 30-year term with a locked 5.25% interest rate. In other words, the buyer would save $10,000 only to end up paying $35,000 more.

Now these prices and rates are just for the sake of example. The point is that sometimes waiting for a home price to reduce may end up costing homebuyers much more than they expect if rates rise.


Find more information about Brad below.Brad_Roche_Pic


The Mortgage Planner
McLean Mortgage Corporation
Phone: 704-728-0191
Fax: 855-484-3752
License: NMLS # 135191
[email protected]



Brad Roche and McLean Mortgage Corporation are not affiliated wtih FSC Securities Corporation.

About Sara Seasholtz

Sara Seasholtz, CFP®, was voted one of "50 Most Influential Women in Charlotte" by The Mecklenburg Times in 2011, and has assisted her clients with their financial planning needs for over 40 years. Have a financial question? ASK SARA!


Get free updates from Financial Strategies for Life™ directly in your email inbox. Your information will be kept completely private.

, , , , ,

Comments are closed.

This communication is strictly intended for individuals residing in the states of CO, CT, FL, MO, NC, NY, SC, TX, VA, WI . No offers may be made or accepted from any resident outside the specific state(s) referenced.

A Broker/dealer, investment adviser, BD agent, or IA rep may only transact business in a state if first registered, or is excluded or exempt from state broker/dealer, investment adviser, BD agent, or IA registration requirements as appropriate. Follow-up, individualized responses to persons in a state by such a firm or individual that involve either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without first complying with appropriate registration requirements, or an applicable exemption or exclusion. For information concerning the licensing status or disciplinary history of a broker/dealer, investment adviser, BD agent, or IA rep, a consumer should contact his or her state securities law administrator.

Third-party rankings and recognitions are no guarantee of future investment success and do not ensure that a client or prospective client will experience a higher level of performance or results. These ratings should not be construed as an endorsement of the advisor by any client nor are they representative of any one client's evaluation.