Buyers aren't asking, "What's the rate?" They're asking, "How do I make the payment work?"

 What Buyers Are Really Asking: "How Do I Make the Payment Work?"

Happy Friday!

Every week I spend time researching the questions buyers are asking Google and ChatGPT before they ever contact a Realtor or lender. My goal is to keep you informed about what your clients are thinking—and to help you answer their questions with confidence.

This Week's Focus: Affordability Isn't Just About the Interest Rate

Mortgage rates moved higher again this week, and as expected, affordability is once again front and center.

But here's what's interesting...

Borrowers aren't asking me, "What's today's rate?"

They're asking,

"How do I make the monthly payment work?"

That's an entirely different conversation—and one where Realtors and lenders can make a tremendous difference.

Today's homebuyers are looking at the total monthly housing payment, including:

• Principal & Interest
• Property Taxes
• Homeowners Insurance
• HOA Dues (when applicable)
• Existing consumer debt
• Cash needed at closing

The good news is that we have more tools available than many buyers realize.

Here are some of the questions borrowers are asking AI this week:

"Do I need 20% down?"

Not at all.

Many qualified buyers purchase with much lower down payments depending on the loan program. In addition, family gift funds can often be used to help with the down payment and closing costs.

"Can the seller help reduce my monthly payment?"

Absolutely.

In today's market we're seeing more sellers contribute toward 2-1 temporary rate buydowns, closing costs, and other concessions that can significantly reduce a buyer's payment during the first two years of homeownership.

These strategies can make a meaningful difference—especially for first-time buyers.

"Should I wait for rates to come down?"

Maybe...but waiting isn't always the best financial decision.

Every buyer's situation is different.

Sometimes purchasing today and refinancing later makes sense.

Sometimes negotiating seller concessions creates more immediate savings than waiting months for a potential rate improvement.

The important thing is understanding all of the available options before making a decision.

Karen's Loan Desk

This week I had two conversations that reminded me why planning matters.

The first was a first-time homebuyer whose parents provided gift funds to help with the down payment. That assistance made homeownership possible much sooner than the buyer thought.

The second is a client purchasing a short-term rental as a first investment property using a DSCR (Debt Service Coverage Ratio) loan. Rather than qualifying based on personal income, the financing focuses primarily on the property's ability to generate rental income.

Two very different borrowers.

Two very different loan programs.

Both becoming homeowners because we explored options they didn't know were available.

The takeaway?

There is rarely just one path to homeownership.

Ask Karen

Question:

"My buyer says the payment is just too high. What should we look at first?"

Answer:

Before giving up, let's review the entire affordability picture.

Can we:

• Adjust the down payment?
• Use gift funds?
• Negotiate seller-paid closing costs?
• Structure a 2-1 temporary buydown?
• Pay off a small monthly debt to improve qualifying?
• Explore a different loan program?
• Consider a property with lower taxes or HOA dues?

Sometimes a few thoughtful adjustments create a payment that fits comfortably within the buyer's budget.

AI Prompt of the Week for Realtors

Copy and paste this into ChatGPT:

Act as a top-producing Orange County Realtor. Write a warm, educational email to a first-time homebuyer who is worried about affordability because mortgage rates have increased. Explain that affordability is about the total monthly payment—not just the interest rate. Mention low down payment options, family gift funds, seller-paid 2-1 rate buydowns, closing cost credits, and the importance of speaking with a mortgage professional before deciding to wait. Keep the tone conversational, reassuring, and under 300 words. End with an invitation to schedule a planning conversation.

Realtor Tip of the Week

One of the best questions you can ask a hesitant buyer is:

"If we could lower your monthly payment, would you still want to buy?"

That question shifts the conversation from whether they can buy to how we can help make it work.

As always, I'm happy to review any financing scenario, compare different loan strategies, and help your clients create a personalized roadmap to homeownership.

Have a wonderful weekend!

Karen Card
The Card Team
Certified Veteran Lending Specialist

Helping Veterans, Self-Employed Borrowers, First-Time Buyers, Seniors, Families in Transition, and Homeowners Navigate Today's Mortgage Market.

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Tax Overhaul is Opposed by CAR

The California Association of Realtors has come out vehemently against the proposed changes to our tax code, which would eliminate the tax deduction for state and local taxes, as well as the deduction for mortgage interest for all loans over $500,000. Loans currently held with higher balances (up to $1 million) would be grandfathered in. Further it would eliminate the interest deduction for 2nd home mortgages. Deductible property taxes would be limited to $10,000. According to CAR the average homebuyer in the state would pay an additional $3000 in taxes annually.

Living here in the sunny state where it seldom rains, this would definitely put a dark cloud over the real estate market. Our median home price here in Orange County is $790,000 and in LA County it is $595,000. Already, home affordability rates in Southern California have fallen to the lowest level since 2008 and statewide housing affordability fell to a 10-year low as the tight housing market has driven prices higher and higher. The percentage of California home buyers who can afford a median-priced home in 3rd Q 2017 fell to 28%. These statistics do not apply to condos but to single family homes. Condos are more affordable, and 38% of Californians can afford the $440,000 median-priced condo.

To be clear, all these statistics assume a 20% down payment. With less down (including many first-timers) the affordability is lower...and with more down payment, affordability rises.

But, here in California and other high-price states such as New York, affordability will drop even more if the tax bill goes through as proposed. Real estate values will surely drop as fewer and fewer buyers can afford homes. A recent article in the WSJ notes that in NYC sales are slowing as buyers ponder the effect the tax changes could have to their disposable income.

We always advise clients as to the after-tax consequence of owning a home with a mortgage, and how the interest and RE taxes will provide them with a deduction on their tax return. We'll see!