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Sophomore Member
Apr 4, 2002
Professional Status
Certified Residential Appraiser
Thanks guys for all your help. I passed the Michigan Exam Monday, but it was not a breeze for me. I had spoken to someone else who took the exam a week or two ago and he told me about a question that he could not get and I think I got the question too. Someone help me with this it is still on my mind. Here it is.

A buyer is buying a loan at 13% (.0------- a number from tables)for 50,000 over 25 years. The seller is going to buydown the loan to 12% (.0------- another number from the tables). How much will this be worth. (The question went something like that)

Then I got another question and I really got concerned. Here is how it went.

Take the same info for the question above and the question is how many points did this save.

I did not see any questions like this in my study material and I studied from Harrisons and another question book, Prelicensure material and book, topics from an Appraisal Institute book and other tidbits here and there. This was a loaded question or I just missed the boat. my hp was ready but my input and output was way off.

Mike Garrett RAA

Elite Member
Gold Supporting Member
Jan 14, 2002
Professional Status
Certified Residential Appraiser
Not enough info to solve your problem.

In the real world it would go something like this.

Two identical homes sold. One sold for $3,000 more than the other. The only difference was the home that sold for more had a 1% interest buydown. In this case, the appraiser would adjust the comparable downward by $3,000 to reflect the concession.

Ask yourself this question....

If I was going to buy a home, how much would I pay to buy the loan down from 13% to 12%. The first thing to do is compare the payments. Lets say there is a $20 dollar difference in the monthly payment. How long would it take for me to recover my investment? Since most homes turn over every 6 to 7 years..at $20 a month it would take 12.5 years to recover the $3,000...probably not a good deal.

The primary reason for buying down a loan is to make it easier for the purchaser to qualify for the loan.
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