With the market change, you may ask yourself, “Should I wait to buy?” Our best advice is to “Date the Rate" and "Marry the Home". With our 2-1 buydown program, borrowers can get a much better rate for the beginning of their loan.
A 2-1 buydown program is a seller concession offered to incentivize buyers to make a purchase. A 2-1 buydown essentially allows borrowers to make a lower mortgage payment for the first two years of their loan, until payments go back up in the third year of the loan. If you are seeking ways to reduce your monthly mortgage payment, a 2-1 buydown could be a potential solution. Let’s dive into a 2-1 buydown and how it works.
If you opt for a 2-1 buydown, as a buyer, your interest rate is reduced by 2% the first year and 1% the second year. For example*, let’s say your fixed interest rate is 6.99%. For the first year, your interest rate will be 4.99%. For the second year, your interest rate will be 5.99%. In year three, you will start paying the 6.99% interest rate. With a $400,000, 30-year fixed interest rate your monthly payments would come out to $2,658.52. For the first year at 4.99%, the monthly subsidy would come out to $513.68. For the second year at 5.99, the monthly subsidy would be $262.89. The total seller concession would come out to $9,318.84.
If this is something that interests you, you may want to ask your real estate agent to negotiate it during the offer process as it will need to be added into the purchase contract. The seller will need to bring the prepaid sum to closing so it can be put into the buyer's escrow account. For more information, contact us today! We are happy to run through scenarios with you and help you make the best decision.
*This example is provided for educational purposes only. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all dollar amounts. Other restrictions and limitations may apply. Equal Housing Opportunity.