If the builder gives $20,000 savings off the price of the home, previous buyers are unhappy and the lower price impacts the entire market, including the builder’s remaining inventory.
Giving the savings in the form of an interest buy down hides the decline in the cash value of the property.
Another catch is that $20,000 in interest savings is much less valuable than a $20,000 price cuts. If you got the price cut, you’d get a tax deduction for the additional mortgage interest you’d be paying and you would have a lower property tax bill for as long as you own the home.
If you think you need a $20,000 price cut to buy, you should be asking for a higher interest buydown – say, $30,000.
