You’ve probably heard of “buydowns” or “temporary buydowns” before, but you may not know precisely what that means.
It is a popular tool buyers use to lower monthly payments and get into a home in what is fast becoming a “buyers” market.
A 2-1 buydown is a mortgage loan option in which the seller or builder reduces the homebuyer’s interest rate for the first two years of the loan. In year one, the interest rate is 2% less than the original, locked-in rate. In year two, the interest rate is 1% less.
Here’s an example. If you’ve locked in a 6.500% interest rate, a 2-1 Buydown Program would allow you to make monthly payments at a 4.500% interest rate for the entire first year of your mortgage. Then, in year two, your payments would be based on a 5.500% interest rate”. Finally, once you hit year three and for the remaining life of your loan, your payments would reflect your originally agreed upon 6.500% interest rate. Unless the rates have gone lower than you simply refinance out of the program into the lower rate!
Not only that but, if there is any money left from the buydown program – you get it back in most cases!
We are having great success asking the SELLER to pay for the buydown on top of that!
Let’s talk and see if we can get you into a home of your own!!