Finding the Balance of Cash for Both Buyers and Sellers

The two biggest challenges we are hearing from realtors today are:

How do I get my buyers “off the fence” to purchase?

How do I price my listings correctly?

Both of these questions come down to cash. How do we help buyers generate cash when they have just started a new job, liquidated savings due to unemployment or a medical challenge, accepted an offer to sell their home where the net proceeds are less than they anticipated or simply haven’t been savers. When we work with buyers, we are continually helping them think creatively on how to access cash. Some of the most obvious resources are:

  • Gift funds (from a family member)
  • Liquidating the cash value of a life insurance policy
  • Borrowing from an individual retirement account
  • Liquidating an individual retirement account
  • Borrowing funds secured by an asset (savings, CDs, stocks, bonds, etc.)
  • Selling an asset (auto, motorcycle, jewelry etc.)

In addition to these resources, as lenders, we have the ability to raise the interest rate to help pay for some or all of the buyer’s closing costs. With interest rates being so low, this will help reduce the cash needed while only minimally increasing the monthly payment. This strategy also helps reduce the amount the seller is asked to pay towards the buyer’s closing costs.

Today, as an example, we could raise the interest rate by .125% and pay the loan origination fee. We could raise the interest rate by .25% and pay a portion of the closing costs, or up the rate by .5% and pay all the closing costs.

Should you have any questions about this mortgage strategy for any of your clients, please contact your Bell Mortgage Loan Officer or give me a call at 952.278.8731.

Jill Meents

Sr. Loan Officer


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