A Common Combo-Loan

Your System and Pricing (example): For simplicity we’ll use an example with round numbers.

Your Financing (example): If your rate and fees are different, the concepts still apply.

Loan Amount: $50,000.00

Rate: 5.99%

Payments first 18-months:$225

Payments after 18-months: $225 (if they buy-down the loan with $15,000 of ITC money)

Payments after 18-months: $322 (if they fail to buy-down the loan)

The most important number above is the monthly payment of $322. There is a big chance that the customer will pay that higher payment for many years to come. 

After 18 Months

The low introductory payments of $225 will only stay at that level if the customer cuts a check for $15,000.

There are a lot of ifs...

There are several reasons why the monthly payment almost always goes up:

The customer likely didn't understand the combo loan in the first place: If the customer truly understands the terms of the combo loan...

Nobody is reminding them of the buy-down: If they remember buydown deadline...

Collecting on the tax credit can be complicated: If they receive the tax credit in the form of a large deposit...

Customer lacks the tax liability to claim the credit: If they have the tax liability...

Some may want to keep the money: ...They still need to write a painful check for $15,000, just to keep their payments from going up. 

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