Temporary Buydowns

With rising interest rates lenders are busy looking for new ways to ease the pain of payment and bringing back some old favorites. One of those is the Temporary Buydown, either 2/1 or the 1/0. Both are helpful and both present a short reprieve from rising rates. This buydown is paid for by the seller via concessions which can still be used to help with other closing costs. The 2 1 buydown allows the borrower to enjoy a rate 2% lower than current market for the 1st year, second year the rate moves up 1% and at the 3rd year the rate is set for the remainder of the loan.
No negative amortization and there is no penalty to refinance, so if rates do come down the borrower can refinance their current loan and take advantage of the lower rates. It’s a win. And if interest rates continue to go up….. the borrower is sitting at a better rate than if they had decided to wait for that illusive rate drop.

If you are interested to know more, please reach out to me and if you would like the form used to calculate exactly how much the buydown will cost a seller, please email me and I can forward you the form.

Have a great day!
Scott