Rate Buydown: Save hundreds of dollars in interest over the first two years of your loan.

While you do have to qualify at today’s rates, we can help you buy the home AND save hundreds of dollars in interest over the first two years of your loan. When interest rates drop back down you can lock in the rate permanently!

2:1 Buydown

2-1 buydown is a type of financing that lowers the interest rate on a 30-year mortgage for the first two years before it rises to the regular, permanent rate. This helps home buyers ease into their new payment for the first 2 years.

*Can not be used for Jumbo loans. Please see permanent buy down for jumbo loan options.

How 2:1 buydowns work, Investopedia.com

Permanent Buy Down

Permanent buydown for conventional 30 fixed or ARM. Buy down the interest rate. Can be used on Jumbo loans.

How permanent buydown mortgages work, Freddiemac.com

How buydowns are structured, Rocketmortgage.com

EXAMPLES

2:1 Buydown Examples:

We’ll assume credit scores of 740+ and a 5% down payment for Conventional financing on a $500,000 purchase price.   

Current 30-year fixed rate of 5.875%

At 3.875% – 1st year payment with taxes , PMI and HOA = $2690

At 4.875 – 2nd year payment with taxes, PMI and HOA = $2970

At 5.875% – Permanent payment with taxes, PMI and HOA= $3266

Borrower saves $576 per month for the first year and $296 per month for the second year. $10,467 total savings.

*Buyer does have to qualify at the permanent rate of 5.875%. The cost of this buydown is $10,467

Permanent Buydown Examples: (Conventional 30 year fixed)

We’ll assume credit scores of 740+ and a 5% down payment for Conventional financing on a $500k purchase price.   Current 30-year fixed rate of 5.875%

At 5.875% – payment with taxes, PMI and HOA= $3266

At 5.250% – payment with taxes, PMI and HOA = $3079 Rate buydown to 5.25% at a cost of $9500.  Monthly savings is $187

Permanent Buydown Examples: (Conventional 7 Year ARM)

Lower rate is locked for 7 years with the likelihood of selling/moving in less than 7 Years or a refinance to a lower rate down the road.

We’ll assume credit scores of 740+ and a 5% down payment for Conventional financing on a $500k purchase price.   Current 7 Year ARM rate of 5.500%

At 5.50% – payment with taxes , PMI and HOA = $3153

At 5.00% – payment with taxes, PMI and HOA = $3006

Rate buydown to 5% at a cost of $9500.  Monthly savings is $147

Permanent Buydown Examples: (FHA 30 Year Fixed)

We’ll assume credit scores of 680+ and a 3.5% down payment for FHA financing on a $500k purchase price.   Current FHA 30-year rate of 5.25%

At 5.25% – payment with taxes , PMI and HOA = $3371

At 4.625% – payment with taxes, PMI and HOA = $3184

Rate buydown to 4.625% at a cost of $9820.  Monthly savings is $187

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