11/30/2022
Thinking of buying? But interest rates are making monthly payments out of your reach?
** I HAVE A SOLUTION FOR YOU **
Then let's talk about temporary buydowns. A temporary buydown allows borrowers to reduce their monthly payment for a limited period of time.
With a temporary buydown, the interest rate that a borrower pays during the early years of the mortgage is reduced as a result of the deposit of a lump sum of money (sometimes called a “subsidy”) into a buydown account, a portion of which is released each month to reduce the borrower's payments. The buydown funds may be provided by various parties and each loan program has its own rules, typically this subsidy is paid by the seller as a closing cost fee.
A common temporary buydown is a “3-2-1,” meaning the mortgage payment in years one, two, and three is calculated at rates of 3 percent, 2 percent, and 1 percent, respectively, below the rate on the loan. The actual note rate and monthly payment that the borrower is obligated to pay is never actually reduced, and the full rate and payment must be reflected on the mortgage documents. At the end of the buydown period, the buydown funds collected at closing will have been exhausted, and the buydown period ends.
Example: 6.5% fixed rate - 1st year 3.5%, 2nd year 4.5%, 3rd year 5.5%, years 4 returns to the original locked rate.
Why is this relative to our current market? The Feds are set to continue raising rates into at least 2023 to combat inflation. However, we have seen multiple reports from key economist that rates will start falling between 2023-2024.
So what does this mean for you? If you are currently in the market to purchase a home, then this could be a great option to lower the monthly payment with the intention of refinancing in 1-2 years.
DM or contact me for details.
funds collected at closing will have been exhausted, and the buydown period ends.
Example: 6.5% fixed rate - 1st year 3.5%, 2nd year 4.5%, 3rd year 5.5%, years 4-30 6.5% fixed.
Why is this relative to our current market. The Feds are set to continue raising rates into at least 2023 to combat inflation. However, we have seen multiple reports from key econimist that rates will start falling between 2023-2024.
So what does this mean for you? If you are currently in the market to purchase a home, then this could be a great option to lower the monthly payment with the intention of refinacing in 1-2 years.
DM or contact me for details.
