Ashley and Jen are both FTHB’s interested in buying a place in Jersey City
There are 2 identical units available and each is listed for $400,000.
Seller A is a 321ADVANTAGE SELLER and Ashley buys the property from this Seller with a 3-2-1 Buydown
Jen buys from Seller B and negotiates a price reduction of $10,000 and pays $390,000

Both buyers have a $20,000 down payment and both qualify for a 30 year fixed rate at 6.5%

• Jen pays: 6.5% x $370,000 = $2,326 for the life of the loan.
  She pays $390,000 for her unit from Day 1.
• Ashley pays: Year #1 3.5% x $380,000 = $1,701 / month

This is the same payment that a Buyer would pay at 6.5% for a loan of $270,574!
So technically - Ashley paid $20,000 DP + $270,574 = $290,574 for her unit in Year #1

Do you think that Ashley feels good about her purchasing decision?
When Jen finds out that Ashley paid $290,574 the first year - how will she feel?

Year #2: 4.5% x $380,000 = $1,918.21
At 6.5% allows you a mortgage amount of $305,125
So in Year #2 Ashley’s payment equates to that of a Homebuyer who paid $325,000 @ 6.5%

Year #3: 5.5% x $380,000 = $2,147.75 which is equal to $341,637 @ 6.5% or = to paying $361,637.

If Ashley sells or refinances after owning the unit for three years she will have paid $290,574 + $325,125 + $361,637 = $977,336 divided by 3 = $325,778 avg.
After 4 years: $1,377,336 / 4 = $344,334
After 5 years: $1,777,336 / 5 = $355,472
After 6 years: $2,177,336 / 6 = $362,889
After 7 years: $2,577,336 / 7 = $368,190
…After 20 years: $388,666