The Case of the 7% Rate

Rates are over 7%.
Whose problem is that?

A buyer can refinance the rate. Nobody refinances the price. Here's the case — and the calculator that shows which remedy is worth the most on your move.

The case

Four years as a prosecutor taught me to follow the evidence.

Exhibit A

A buyer can refinance the rate.

If rates fall, a buyer can trade the loan for a cheaper one. The price paid for the house is permanent.

Exhibit B

Every buyer shops at the same rate.

Every buyer in Louisville sees the same rate sheet. If a price doesn't work at today's rate, the house sits — and that's on the seller.

The Verdict

High rates are the seller's problem.

The seller pays either way. The buyer picks the remedy: a price cut, a seller credit, a rate buydown, or an ARM.

Run the numbers

Which remedy is worth the most?

Same seller concession, four ways to take it. The right answer depends on one question: how long will you keep the loan?

Purchase price $650,000

Down payment 10% · $65K

Seller concession 3% · $19,500

Conventional limit at this down payment: 6%.

Years you keep the loan 10 years

Rate assumptions

30-yr fixed rate (%)

5-yr ARM starting rate (%)

ARM rate after year 5 (%)

Unknown today — set it to the scenario you want to test.

Rate drop per point (%)

Buyer closing costs (% of price)

Return on cash you keep (%)

The verdict

$28,741

Over 10 years, seller credit → rate buydown beats seller credit → closing costs by this much on a $650,000 home — counting what your cash could have earned.

1
Seller credit → rate buydownBest
Best value$3,714/mo · $84,500 to close
3.33 points buy the rate down to 6.542%.
2
Price cut
+$22,725$3,919/mo · $82,550 to close
Price drops $19,500; smaller loan.
3
5-yr ARM + credit → closing costs
+$23,161$3,843/mo · $65,000 to close
Starts at 6.875%; assumes 7.875% after year 5.
4
Seller credit → closing costs
+$28,741$4,040/mo · $65,000 to close
Credit covers $19,500 of closing costs.

Monthly payment is principal and interest only, starting payment. “+$” is how much more each option costs than the best one over your timeline.

What it means for you

The seller pays either way. The buyer picks the remedy.

If you're buying

You have more leverage than the headlines suggest.

Don't just ask for a lower price — ask for the concession that's worth the most over the time you'll own.
Planning to move or refinance within five years? An ARM or a credit toward closing costs often wins.
Staying put? A permanent rate buydown usually pulls ahead the longer you keep the loan.
With 10%+ down on a conventional loan, a seller can contribute up to 6%; under 10% down, up to 3%.

If you're selling

A credit can sell your home without cutting your price.

A $20,000 credit costs you about the same as a $20,000 price cut — but to the right buyer it can be worth far more.
Most buyers are cash-tight after the down payment. A credit solves their real problem — and gets your home chosen.
Structuring the concession for the buyer's situation is how homes sell in a 7% market.
I'll show you which offer actually nets you the most before you sign.

The deciding factor

Time value of money.

A dollar you keep at closing can earn for you every year you own the home. A lower rate saves you a little every month, for as long as you keep the loan. Which one wins depends on time.

Over a short horizon, cash in hand and a lower starting payment usually win. Over a long one, a permanently lower rate usually does. The calculator above does that math for your timeline.

You can change your rate later. You can never change your price.

Your case, your numbers

I'll run your numbers.

Buying or selling this fall? Send me the address or the price range and I'll model every remedy for your situation — with a lender's live rates — before you make a move.

Run my numbers Call 502.298.9961

Andrew Beckman, J.D.The Beckman Group · Lenihan Sotheby's International Realty

How the calculator works. For each option it adds up the cash you bring to closing and every monthly payment through the years you select, grows each at the "return on cash" rate (time value of money), and adds the loan balance still owed at the end. Lower total = better. A price cut lowers the price and loan; a seller credit toward closing costs is limited to your actual closing costs; a rate buydown uses the credit to buy discount points (capped at 4 points, any remainder applied to closing costs); the ARM option pairs a 5-year ARM with the credit toward closing costs and assumes the rate you enter after year 5. Taxes, insurance, HOA dues, mortgage insurance, and refinancing are not included.

For illustration only. Not an offer of credit or a commitment to lend; actual rates, APRs, points, closing costs, and concession limits depend on the lender, loan program, credit, and property, and change daily. Consult a licensed mortgage professional and your tax advisor. Seller-contribution limits shown are typical for conventional loans; FHA, VA, and jumbo programs differ.

Andrew Beckman, Broker, licensed in Kentucky and Indiana · The Beckman Group · Lenihan Sotheby's International Realty. Each office is independently owned and operated. Equal Housing Opportunity.

The Case of the 7% Rate

Rates are over 7%.Whose problem is that?

Four years as a prosecutor taught me to follow the evidence.

A buyer can refinance the rate.

Every buyer shops at the same rate.

High rates are the seller's problem.

Which remedy is worth the most?

The seller pays either way. The buyer picks the remedy.

You have more leverage than the headlines suggest.

A credit can sell your home without cutting your price.

Time value of money.

I'll run your numbers.

Work With Andrew & The Beckman Group

Get in Touch

Contact Details

Rates are over 7%.
Whose problem is that?