Cartus Consulting guides organizations of all sizes to the best solutions in global relocation and mobile workforce development. In this, the last installment of a four-part series, Cartus Consulting Services looks at the top issues in U.S. Home Sale.
Interest rates are really low. What changes should I be making to the new home purchase assistance benefit?
With interest rates at historic lows, now is the time to make changes to the new home purchase assistance in your policy.
Consider that the vast majority of lenders are quoting fees without discount points and/or loan origination fees. In addition, lenders recently admitted that the loan origination fee acts like a discount point (which lowers the interest rate for the life of the loan). Each point, usually equivalent to 1% of the loan amount, lowers the interest rate by 0.125 percent for a 30-year loan.
Our recommendation is to remove the points/loan origination fee from your relocation policies. If you are resistant to doing that because interest rates will rise in the future, you can institute a sliding scale based on the 30-year Fed rate. For example, if rates are under 8%, no points/loan origination fee are offered; if rates are 8.01%-9.5%, offer 1 point; if rates are over 9.51%, offer 2 points, etc. The sliding scale rates and number of points can be customized to best fit your needs.
For more detailed information on home purchase assistance benefits, read the full Cartus Consulting Services | Top Issues in U.S. Home Sale document.