This document discusses strategies for real estate transactions. It compares taking out a larger loan to cover closing costs versus keeping the loan smaller and using lender credits to pay costs. The document shows that by keeping the sales price lower and using lender credits, the buyer gains equity faster over time. In 20 months, they avoid paying an extra $7,500 and gain $7,100 in additional equity compared to raising the loan amount. The overall message is that keeping sales prices lower and using lender credits benefits both buyers and sellers.

1. By Michael Lasater #

2. *Please silence your cell phone
and save texting for breaks.
*Thank you.

3. *
*Commitment to the
financial well being of
our clients.
*Licensed loan officer
with over 10 years of
experience.

4. *
*Understand Lender Revenue
*Change the way you buy and
sell homes
*Generate More Sales
*Put buyers in equitable position
*Make More Money

5. Inventory – The good the bad and the ugly
Buyer’s market or Seller’s market?
Are we competing against other offers?
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9. *

10. *

11. *

12. *

13. Buyer’s agents – do your clients need
concessions?
Listing agents – Are your sellers willing to
pay concessions?
Where are values going?
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14. Full price offer
No Seller concessions or repairs
As Is Condition
Fast Closing
Due Diligence
No Contingencies
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15. *
*Buyer
*Seller
*Agent
*Lender

16. • Lender fees
• Title fees
• Pre-paid/escrow account
• 3rd Party fees : appraisal, credit, flood
• Additional costs: Review appraisal etc.
• Mortgage Insurance
*

17. Monthly vs. Up Front
Seller paid premium
Lender paid premium
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18. Short term strategy
Long term strategy
Interest rate vs. MI rate
*

19. Is it better to pay more for a house or less
for a house?
Higher sales price = lower rate
Lower sales price = higher rate
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21. Financial Health

22. Higher rates pay higher yield
The yield is used as a lender credit to pay
costs
*

23. *
FNMA
FHLMC
FHA VA USDA
Owner Occupied
LTV/CLTV
90.01 or greater
75.01 to 90.00
75.00 or less
3%
6%
9%
6%
Maximum all loans
4%
Maximum all loans
Note:
Vet cannot pay
closing fee or
termite inspection
No Seller Contribution Limit*
Closing cost can also be financed up to 100% of appraised
value.
Non-Owner Occupied 2% Maximum all
LTV's
N/A N/A N/A
FNMA
Homepath
Follow standard
maximum's with the
exception of LTV's
over 90% allow up to
6% concessions
N/A N/A N/A

24. If a seller grants credits, it assumed that
the selling price could be negotiated lower
by the exact amount of said credit.
To allow for a seller credit, the property
would have to appraise for the higher sales
price.
*

25. *
The difference in payment:
$257,500 loan amount with 3% closing costs
including 1% origination @ 4.00% = $1229.34
$250,000 loan amount 0% origination @ 4.25% =
$1229.85

26. *

27. No Seller Concession
Buyer in equitable position
Financial well being
Facilitate more transactions
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28. By increasing the loan amount to pay closing
costs it will take 20 months at P & I $1229 to
get back to the original sales price of
$250,000.
A lender paid option keeping the sales price
at $250,000 with a rate of 4.25% (same
payment of $1229), in 20 months the new
balance is $242,875.
*

30. Loan amount $257,500 @ 4% rate and P & I
payment is $1229.34 (we added the closing
costs to the loan amount)
*
Date Interest Principal Balance
Aug, 2013 $858.33 $371.01 $257,128.99
Sep, 2013 $857.10 $372.25 $256,756.74
Oct, 2013 $855.86 $373.49 $256,383.25
Nov, 2013 $854.61 $374.73 $256,008.52
Dec, 2013 $853.36 $375.98 $255,632.54
Jan, 2014 $852.11 $377.24 $255,255.30
Feb, 2014 $850.85 $378.49 $254,876.81
Mar, 2014 $849.59 $379.76 $254,497.05
Apr, 2014 $848.32 $381.02 $254,116.03
May, 2014 $847.05 $382.29 $253,733.74
Jun, 2014 $845.78 $383.57 $253,350.17
Jul, 2014 $844.50 $384.84 $252,965.33
Aug, 2014 $843.22 $386.13 $252,579.20
Sep, 2014 $841.93 $387.41 $252,191.79
Oct, 2014 $840.64 $388.71 $251,803.09
Nov, 2014 $839.34 $390.00 $251,413.09
Dec, 2014 $838.04 $391.30 $251,021.78
Jan, 2015 $836.74 $392.61 $250,629.18
Feb, 2015 $835.43 $393.91 $250,235.27
Mar, 2015 $834.12 $395.23 $249,840.04

31. Loan amount is $250,000 @ 4.25% rate and
P & I payment is $1229.85 (we used a
lender credit to pay for the closing costs)
*
Date Interest Principal Balance
Aug, 2013 $885.42 $344.43 $249,655.57
Sep, 2013 $884.20 $345.65 $249,309.91
Oct, 2013 $882.97 $346.88 $248,963.04
Nov, 2013 $881.74 $348.11 $248,614.93
Dec, 2013 $880.51 $349.34 $248,265.59
Jan, 2014 $879.27 $350.58 $247,915.02
Feb, 2014 $878.03 $351.82 $247,563.20
Mar, 2014 $876.79 $353.06 $247,210.14
Apr, 2014 $875.54 $354.31 $246,855.82
May, 2014 $874.28 $355.57 $246,500.25
Jun, 2014 $873.02 $356.83 $246,143.43
Jul, 2014 $871.76 $358.09 $245,785.33
Aug, 2014 $870.49 $359.36 $245,425.97
Sep, 2014 $869.22 $360.63 $245,065.34
Oct, 2014 $867.94 $361.91 $244,703.43
Nov, 2014 $866.66 $363.19 $244,340.24
Dec, 2014 $865.37 $364.48 $243,975.76
Jan, 2015 $864.08 $365.77 $243,609.99
Feb, 2015 $862.79 $367.06 $243,242.93
Mar, 2015 $861.49 $368.36 $242,874.56

32. $257,500 @ 4% what happens in 10 and 20 years?
Date Int Prin Bal
Aug 2023 $676.23 $553.12 $202,315.58
Aug 2033 $404.74 $824.60 $120,597.96
$250,000 @ 4.25% what happens in 10 and 20
years?
Date Int Prin Bal
Aug 2023 $703.40 $526.45 $198,081.64
Aug 2033 $425.21 $804.64 $119,253.86
*

33. The math shows how buyers gain equity
faster with lender paid costs vs. seller paid
costs.
In 20 months we avoided an additional
$7,500 to the price to cover costs,and
gained equity of $7,100
The payment was within 51 cents!
20+ year break even point
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38. Thank you for coming!!!