Should you ask for a seller-paid rate buydown or push for a price cut? If you are buying in Browns Point or nearby Tacoma–Lakewood, the choice can change your monthly payment today and your lifetime savings tomorrow. You want clarity without the jargon so you can negotiate confidently and stay on budget. In this guide, you will see simple, local examples and a quick way to decide which option fits your plans. Let’s dive in.
The two options, defined
Seller-paid rate buydown
A temporary buydown uses a seller credit at closing to lower your interest rate for the first one to two years. A common structure is a 2-1 buydown: your rate is reduced by 2.00% in year one and 1.00% in year two, then returns to the note rate in year three. The seller funds this by prepaying the difference between the normal payment and the reduced payment for those months.
Why buyers consider it:
- Bigger payment relief in the first 12 to 24 months.
- Can help you qualify if monthly debt-to-income is tight, subject to lender rules.
- Helpful if you expect to refinance within a few years.
Price cut
A price cut lowers the sale price and your loan amount permanently. With a 20% down payment, each dollar of price reduction lowers your loan by 80 cents. The result is a smaller, permanent monthly payment for the full loan term.
Why buyers consider it:
- Permanent savings over the life of the loan.
- Lower loan balance from day one.
- Typically wins if you plan to stay long term.
How the math works
For a 30-year fixed loan, lenders calculate your principal and interest payment using a standard formula. In our examples, we assume:
- 30-year fixed mortgage
- 20% down payment
- Note rate: 6.75% (example baseline)
- 2-1 temporary buydown structure
All numbers below are approximate and for illustration. Always get current quotes from your lender before you decide.
Browns Point examples at common price points
Example: $600,000 purchase (loan ≈ $480,000)
- Baseline monthly P&I at 6.75%: about $3,114
- Year 1 at 4.75%: about $2,504
- Year 2 at 5.75%: about $2,802
- Seller subsidy for a 2-1 buydown: about $11,070
If the seller instead uses that $11,070 as a price cut:
- Loan reduction at 20% down: about $8,856
- New loan: about $471,144
- New monthly P&I: about $3,056
- Permanent monthly saving: about $58
Cumulative savings comparison:
- After 1 year: buydown about $7,321 vs price cut about $691
- After 5 years: buydown about $11,070 vs price cut about $3,456
- After 30 years: buydown about $11,070 vs price cut about $20,736
- Break-even time for price cut to “catch up”: about 16 years
Example: $850,000 purchase (loan ≈ $680,000)
- Baseline monthly P&I: about $4,412
- Year 1: about $3,549
- Year 2: about $3,960
- Seller subsidy for 2-1 buydown: about $15,776
If the seller instead applies $15,776 as a price cut:
- Loan reduction at 20% down: about $12,621
- New loan: about $667,379
- New monthly P&I: about $4,329
- Permanent monthly saving: about $83
Cumulative savings comparison:
- After 1 year: buydown about $10,357 vs price cut about $992
- After 5 years: buydown about $15,776 vs price cut about $4,962
- After 30 years: buydown about $15,776 vs price cut about $29,772
- Break-even time: about 15.8 years
Example: $1,200,000 purchase (loan ≈ $960,000)
- Baseline monthly P&I: about $6,228
- Year 1: about $5,008
- Year 2: about $5,603
- Seller subsidy for 2-1 buydown: about $22,144
If the seller instead applies $22,144 as a price cut:
- Loan reduction at 20% down: about $17,715
- New loan: about $942,285
- New monthly P&I: about $6,113
- Permanent monthly saving: about $115
Cumulative savings comparison:
- After 1 year: buydown about $14,642 vs price cut about $1,382
- After 5 years: buydown about $22,144 vs price cut about $6,912
- After 30 years: buydown about $22,144 vs price cut about $41,400
- Break-even time: about 16.1 years
What this means for you
- Short term: A temporary buydown usually lowers your first-year payment far more than a price cut. If you value immediate cash flow or need help qualifying, the buydown often wins.
- Long term: A price cut typically delivers greater lifetime savings, but only after a long hold period. In these examples, the break-even is roughly 15 to 17 years.
- Planning to refinance: If you expect to refinance in 3 to 5 years, the buydown’s front-loaded savings often provide more benefit before you reset your rate.
- Down payment matters: With less than 20% down, more of the price cut flows to the loan amount, which can shorten the break-even timeline.
Local factors in Tacoma–Lakewood and Browns Point
Browns Point is a small, established waterfront peninsula within the Tacoma area, and price trends can differ from Tacoma and Lakewood averages. In competitive moments, sellers may prefer to keep the recorded sale price higher and offer a buydown to attract buyers. In slower periods, a price reduction can help generate activity.
Your total monthly cost also includes property taxes, insurance, and any HOA dues. These affect how much you value near-term relief versus permanent savings. If you are comparing homes with different taxes or dues, re-run the math with your lender to see the full monthly impact.
Appraisals, comps, and recorded price
A price cut lowers the recorded sale price, which can influence comparable sales and neighborhood pricing. A buydown preserves a higher recorded price while still improving buyer affordability in the short term. If you are selling and want to maintain comps for the neighborhood, a buydown can be attractive.
Lender rules and practical constraints
- Seller concessions: Loan programs limit seller-paid credits, including buydowns. Limits vary by loan type and down payment. Confirm allowable amounts with your lender.
- Underwriting and qualification: Some lenders qualify you at the note rate, while others may consider the temporary reduced payment for the buydown period. Ask how your lender qualifies payments and what they will document.
- Timing and disclosure: Seller credits and buydowns must be disclosed and shown on your Closing Disclosure. Funds flow through escrow and must meet program rules.
- Taxes and accounting: Seller-paid buydowns are generally treated as seller concessions. Always confirm your specific tax situation with a professional.
A quick decision framework
Use this simple checklist before you write an offer:
- Get 2 to 3 lender quotes that show the exact seller subsidy needed for a 2-1 buydown and the resulting first- and second-year payments.
- Ask your agent to calculate the equivalent price cut and how it reduces your loan amount given your down payment.
- Compare cumulative savings at 1 year, 5 years, and 30 years. Note the break-even timeline by dividing the seller subsidy by the permanent monthly saving from the price cut.
- Confirm program limits for seller concessions and any appraisal or MLS reporting implications.
- Factor in your likely hold period and your outlook on refinancing.
Bottom line
If you need immediate payment relief or expect to refinance soon, a seller-paid temporary buydown often delivers more value in the early years. If you plan to stay in your Browns Point home for the long haul and do not mind a lower recorded sale price, a price cut can win over time. The right move depends on your timeline, down payment, and lender terms. A clear side-by-side with live quotes will make the choice obvious.
Ready to run the numbers on a specific Browns Point or Tacoma–Lakewood home and negotiate the right structure? Connect with The Breckenridge Team to compare offers, model your monthly payments, and approach the market with confidence.
FAQs
In Browns Point, which option lowers my first-year payment more?
- For the same seller cash, a 2-1 temporary buydown typically cuts your first-year payment more than a price reduction, based on the examples shown.
How long do I need to stay for a price cut to save more overall?
- In these examples, the break-even is roughly 15 to 17 years, depending on price point, down payment, and rate.
Will a seller-paid buydown affect my ability to qualify for the loan?
- Lenders can allow buydowns, but qualification rules vary. Many qualify at the note rate, so confirm how your lender treats reduced first-year payments.
Does a price cut impact neighborhood comps in Browns Point?
- Yes. A price cut lowers the recorded sale price, which can influence comparable sales. A buydown preserves the recorded price while improving near-term affordability.
Are there limits on seller-paid buydowns or credits?
- Yes. Seller concessions are capped by loan program and down payment. Your lender should confirm applicable limits and documentation requirements.
What if my down payment is less than 20%?
- A larger portion of a price cut reduces your loan when you put less down, which can increase the permanent monthly saving and shorten the break-even timeline.
