How Buyers Are Lowering Mortgage Payments With a $20K Credit

Added: 2026-05-16

[00:00:00]Many buyers get in seller credit nowadays, and I want you to use effectively this money. If you use it the wrong way, you might end up losing around 500 every month versus saving 500 every month. Let me show you what I mean. Imagine you are buying this house for around 800,000, and the seller gives you 20,000 as a concession discount.

[00:00:25]Sounds great, right? And most people would have a first instinct to lower the purchase price. But in reality, that only saves you around $120 per month.

[00:00:37]Not too much, right? Now, let's see more effective scenario. You can use this same 20,000 to buy down your interest rate. For example, with a 7-year arm scenario, which means you get a lower fixed rate for the first 7 years, and now your payment drops to around 5,600 instead of 4,100 a month. That's around 500 in monthly saving. Same money, but completely different result. Only with my nose at 7 arm scenario, in 7 years, you must refinance, and we don't know what rate's going to be in 7 years, right? Or hopefully, within the 7-year period, you will refinance. There is another option which I like better, actually, and it's called 2-1 buy down.

[00:01:29]So, in the first year, your payment could be around 5,200.

[00:01:35]That's almost 1,000 less per month. In the second year, your monthly payment around 5,600. And only after that, on the third year, you're going to go to full monthly payment of 6,100. This really helps you in the first couple of years when your expenses are usually higher, or you just bought a new house, you want to do remodel. On a third year, you're going to have a full monthly payment of 6,100, but I'm a hopeful person. I hope within these 3 years the rates go down at some point and you will fast refinance it.

[00:02:15]So, as you see, it's not just about getting a credit from the seller, it's about how effectively you use it.

[00:02:23]If you're planning to buy a house, please reach out to me and I will help you to break down the numbers and choose the best option for you.