Rate Buydowns vs. Price Cuts: Marietta Buyer Math

Should you ask for a seller-paid rate buydown or push for a straight price cut? If you are buying or selling in Marietta and Cobb County, this choice can change your monthly payment, your tax base, and even neighborhood comps. It can also shape how your offer is received. In a few minutes, you will see how the math works, when each strategy shines, and how to compare options for your exact situation. Let’s dive in.

Buydown vs. price cut: what they mean

A rate buydown is a lump-sum credit paid at or before closing that lowers the buyer’s mortgage interest rate. It can be temporary, like a 2/1 buydown that drops the rate for the first two years, or permanent by paying points to reduce the rate for the full term. The credit shows on your Closing Disclosure and must be approved by the lender.

A price cut reduces the sale price. That lowers the buyer’s loan amount, which reduces the monthly payment for the entire loan term. It can also lower the buyer’s property tax base based on local assessment rules and may help the buyer hit lower PMI thresholds faster.

Here are the core tradeoffs you will weigh:

• Cash flow: A price cut reduces the payment for the whole term. A temporary buydown concentrates savings in the first one to three years. A permanent buydown reduces the payment long term, but it costs points upfront.
• Comps and appraisal: A price cut lowers the recorded sale price, which can influence neighborhood comps. A buydown preserves the sale price on record. Appraisers focus on comps and condition, not buydown credits.
• Taxes and lifetime cost: A lower price can reduce property taxes and total interest over time. A buydown does not change assessed value and only lowers interest paid if it is permanent.
• Loan rules: Seller-paid buydowns and credits are subject to program limits and lender approval. Not all lenders treat buydown credits the same.

The buyer math made simple

Monthly payment basics

Your monthly principal and interest depend on the loan amount, interest rate, and term. You can use a standard amortization calculator, or keep a simple shortcut in your pocket.

Quick tool: payment per $1,000 of loan

For a 30-year loan, you can estimate monthly principal and interest with a factor called “payment per $1,000.” For example, at 6.75% the monthly payment is about $6.56 per $1,000 of loan. Multiply that factor by your loan amount in thousands to estimate your payment.

• Example: $360,000 loan at 6.75% → 360 × $6.56 ≈ $2,361 per month (principal and interest only).

Use the same idea at different rates to compare options quickly.

Converting monthly savings into an equivalent price cut

You can translate a monthly payment drop into a price reduction that would produce the same effect at the same rate.

• Step 1: Find the monthly savings S.
• Step 2: Use the payment factor m at your base rate as a per-dollar factor. At 6.75% for 30 years, m ≈ $6.56 per $1,000, or $0.00656 per $1.
• Step 3: Equivalent loan reduction D = S ÷ 0.00656.
• Step 4: If you are putting 20% down, divide by 0.8 to estimate the equivalent price reduction.

Hypothetical Marietta scenario: side-by-side

To make this real, here is a simple, hypothetical scenario that mirrors many Cobb County purchases. Numbers are rounded for clarity.

• Purchase price: $450,000
• Down payment: 20% ($90,000)
• Loan amount: $360,000
• Term: 30 years
• Base rate: 6.75% (payment factor ≈ $6.56 per $1,000)

Option 1: Permanent buydown (6.75% down to 5.75%)

• 6.75% payment: 360 × $6.56 ≈ $2,361/month.
• 5.75% payment: payment factor ≈ $5.84 per $1,000 → 360 × $5.84 ≈ $2,102/month.
• Monthly savings: about $259.

If the seller pays points to achieve this buydown, you can estimate the break-even period by comparing the upfront cost to the monthly savings.

• Example cost: if points total $9,000, break-even ≈ $9,000 ÷ $259 ≈ 35 months.
• If you plan to own longer than the break-even horizon, a permanent buydown often produces larger long-term savings than a temporary buydown.

You can also convert that $259 monthly savings into a price reduction equivalent at the base rate.

• Equivalent loan reduction: $259 ÷ 0.00656 ≈ $39,500.
• With 20% down, equivalent price cut ≈ $39,500 ÷ 0.8 ≈ $49,400.

That means a permanent buydown to 5.75% can feel like nearly a $50,000 price reduction in monthly-payment terms, provided you stay in the home beyond break-even.

Option 2: Temporary 2/1 buydown

• Year 1 effective rate: 4.75% (factor ≈ $5.22 per $1,000) → ≈ $1,879/month.
• Year 2 effective rate: 5.75% → ≈ $2,102/month.
• Year 3 and beyond: 6.75% → ≈ $2,361/month.

Savings compared to the base 6.75% payment:

• Year 1 savings: ≈ $2,361 − $1,879 ≈ $482/month.
• Year 2 savings: ≈ $2,361 − $2,102 ≈ $259/month.
• 2-year total savings: ≈ $482 × 12 + $259 × 12 ≈ $8,900.

A 2/1 buydown concentrates savings in the first two years. This can help if you want breathing room now and expect to refinance or see income growth later.

Option 3: Price reduction

A price cut lowers your loan amount and your payment for the full 30 years.

• Example: $20,000 price cut with 20% down reduces the loan by $16,000.
• Monthly savings at 6.75%: 16 × $6.56 ≈ $105/month.
• Over five years, that is roughly $6,300 in payment savings, plus potential property tax savings and less interest paid.

If you aim for a bigger monthly impact, use the conversion method. For about $259 per month of savings at 6.75%, you would need roughly a $49,400 price cut with 20% down. That is not always realistic, which is why buydowns can be a strong lever for near-term affordability.

Marietta and Cobb County factors to include

Market conditions and comps

In a balanced or cooling market, a visible price cut can attract more buyers. In a competitive neighborhood, sellers may prefer a buydown to preserve an on-record sale price that supports local comps. The right move depends on current days on market and inventory in your micro-area.

Property taxes in Cobb County

Property taxes are based on assessed value and millage rates. A lower sale price can reduce your assessed value and lower taxes, subject to local rules and timing. Always include estimated taxes when you compare a price cut to a buydown.

HOA dues and insurance

HOA dues are generally unaffected by a rate buydown or small price change. Home insurance is based on replacement cost and risk factors rather than contract price, so a price cut typically does not change your premium. Include HOA and insurance in your total monthly budget for a true apples-to-apples comparison.

Lender practices and program rules

Seller credits have program caps and documentation requirements. Conventional, FHA, VA, and USDA loans can allow seller-paid points or temporary buydowns, but each has limits and rules, and the lender must approve structure and wording. Confirm with your lender before you write the offer.

Appraisal interactions

Appraisers do not assign extra value for a buydown. A lower contract price, however, will appear in comps and can influence future valuations. Sellers who want to protect neighborhood pricing often prefer a buydown if it aligns with buyer needs.

When each option tends to make sense

• You want the lowest lifetime cost and plan to stay long term: Price reduction, or a permanent buydown if the break-even horizon fits your plans.
• You need near-term breathing room and expect to refinance within 1 to 3 years: Temporary buydown.
• You are selling and want to preserve neighborhood comps: Offer a buydown rather than cutting price, assuming lender approval.
• The market is price-sensitive and inventory is rising: A price cut may drive more showings and offers.

Negotiation tips for Marietta buyers and sellers

• Put monthly math front and center. Show the buyer’s payment under each option and the seller’s net proceeds under each.
• Confirm seller credit caps with the lender before making promises in the offer.
• If using a temporary buydown, clarify how funds are held and applied and who controls the reserve.
• If you are the buyer, ask your lender for quotes on both a permanent buydown and a 2/1 buydown so you can compare against a price cut.

Checklist to run your numbers

• Nail down price, down payment, loan type, and your base rate quote.
• Get lender pricing for permanent points and a 2/1 buydown structure.
• Compute P&I at the base rate, the buydown rates, and with realistic price cut scenarios.
• Include estimated property taxes, HOA dues, insurance, and any PMI impact.
• Compare savings at 1, 3, 5, and 10-year horizons, plus your likely refinance plan.
• Check seller concession limits for your loan type and confirm with your lender.
• Weigh appraisal and comps impact if preserving sale price matters in your neighborhood.

How to decide with confidence

Start with your likely time horizon. If you plan to own beyond the break-even period and want to maximize total savings, a permanent buydown or a meaningful price cut can both work. If you need near-term relief or expect to refinance, a 2/1 buydown can deliver strong early savings with a smaller seller credit.

Then layer in Marietta-specific realities: current competition in your neighborhood, the importance of comps, and how Cobb County taxes and exemptions will affect your total monthly outlay. The right answer is the one that aligns with your timeline, budget, and negotiation leverage today.

Ready to see the side-by-side for your exact address and loan scenario? Reach out and we will run the numbers with your lender and craft the offer language that fits your goals.

If you want a clear plan tailored to your situation, connect with The Chrismer Group. We will break down your options, coordinate with your lender, and guide your negotiation so you can buy or sell with confidence.

Schedule a free consultation with The Chrismer Group. Hablamos español y falamos português.

FAQs

What is a seller-paid rate buydown and how does it work?

• It is a lump-sum credit at closing that lowers your mortgage rate either temporarily (for the first 1 to 3 years) or permanently by paying points, subject to lender approval and program limits.

Which saves more per month in Marietta, a buydown or a price cut?

• For the same seller cost, a temporary buydown usually delivers larger early monthly savings, while a price cut spreads smaller savings across the full loan term and can reduce taxes.

How does a price cut affect property taxes in Cobb County?

• A lower sale price can reduce your assessed value and taxes under local rules, so include estimated taxes when you compare a price cut to a buydown.

Will a buydown change the appraisal or comps on my home?

• Appraisers value on comps and condition, not buydown credits; a price cut, however, lowers the recorded sale price and can influence future comps.

Can I combine a price reduction and a buydown in one offer?

• Yes, you can blend both if the total seller credits stay within your loan program’s limits and your lender approves the structure and documentation.

How do I find the break-even point for a permanent buydown?

• Divide the upfront cost of the points by the monthly savings from the lower rate to get break-even months, then compare that to your expected ownership timeline.

Are there limits on seller credits for buydowns with conventional, FHA, or VA loans?

• Yes, each program sets maximum seller concessions and rules for how credits can be used, so confirm exact limits with your lender before writing the offer.