Incentive to pay more


#1

I thought of PMI recently and how the incentive was strong for borrowers to get to 80% equity position so as to avoid the requirement to pay this monthly fee. Hmmm, I wonder if such an incentive system would be effective in structuring an in park financed sale?

Would improved retention rate be realized from this sort of thing? What would be its explanation?

Karl OH had posted in about a reduction in sales price for additional down payment


#2

Caveat: I agree with Karl. Technically, under Ohio consumer law, you have to offer the same price if selling for cash OR on a note. That provision of the law does not seem to be very well enforced…although do-gooders like ACORN are getting more funding…

As a practical matter, I see a number of people taking Karl’s approach. In particular, I have noticed that Latino buyers have a tendency to pre-pay notes, especially if incentives are involved. Hitting people around tax time seems to help as well.