Pay Down Debt or Buy Down Your Rate? How One Buyer Won With High Rates

By Kandie Frederick

Growing up on the central coast, Kandie is a third generation family in the North County and a second generation family in real estate. Joining Country Real Estate in 2000, and graduating from Cal Poly in San Luis Obispo, she brings a background of Agricultural Business to combine with her knowledge of the local real estate market. Working with her family and their decades of local real estate development, she is deeply connected to the roots of our community and its growth.

This fall, mortgage rates climbed seven weeks in a row to their highest level in about three years, and a lot of buyers hit pause. One of my recent buyers didn’t. She asked a different question, and it got her the best rate available and the home she wanted.

The question that changes everything. Most buyers ask, “How do I get the lowest rate?” The better question is, “What’s the best package for me?” When rates rise, the go-to answer is a buydown: paying points upfront to lower your rate. It’s a real tool, and plenty of buyers are using it right now. But it isn’t the only one, and it isn’t always the best use of your money.

Paying down debt instead of buying down the rate. When my buyer sat down with her lender, they looked at her whole financial picture. Lenders price a loan on more than the market. Your credit and how much debt you carry compared to your income both play a part. In her case, putting money toward existing debt did more than putting it toward points. She qualified for the best rate available at that time, moved in without that old debt, and got the house she wanted. Same dollars, a better outcome. It’s one more reason starting the buying process early pays off.

It doesn’t have to be all or nothing. Maybe you want a strong rate but don’t want to pay off everything yet. You might want to keep some funds for flooring, paint or a few upgrades before you move in. That’s a smart goal, and your lender can show you where the balance is: how much to pay down, how much to keep, and what each option does to your rate and payment. The right answer depends on your goals, and a good lender will run it more than one way.

Why waiting isn’t much of a plan. The major forecasters expect rates to stay elevated into 2027. At the same time, California’s ongoing shortage of homes for sale is expected to keep prices rising slowly. Waiting for a big rate drop is a gamble. A slower market, though, does mean less competition and more room to negotiate. That’s something you can use today, including asking a seller to help with your costs.

Build your package. You can’t control rates. You can control your finances, your plan and your negotiating position. If you’re in the Paso Robles area or on the Central Coast and the headlines have you on pause, let’s sit down and map out the best package for your goals. Call or text me at (805) 878-2225, email kandie@countryrealestate.com, or visit countryrealestate.com.

(General information, not financial advice. Talk with your lender about your situation.)