What is a 2-1 Interest Rate buy down for Home buyers?

  • What is a 2-1 Buydown Mortgage? Exploring the Pros and Cons | New Home Inc.: https://newhomeinc.com/blog/what-is-a-2-1-buydown-mortgage-exploring-the-pros-and-cons/
  • 2-1 Mortgage Buy Down – How Does It Work? – Signature Home Loans, Phoenix, AZ: https://www.azmortgagebrothers.com/blog?month=202211&id=1598979940&cat=1512390981&pg=&refer=index&title=2-1+Mortgage+Buy+Down+%26%238211%3B+How+Does+It+Work%3F
  • Buyers and Sellers Can Win With 2-1 Buydowns | Realty Austin: https://www.realtyaustin.com/blog/2-1-buydown
  • 2-1 Buydown Program for Home Buyers – Yes or No? – Mylene Merlo: https://www.mylenemerlo.com/blog/2-1-buydown/
  • Understanding a 3-2-1 Interest Rate Buydown – American Pacific Mortgage: https://www.apmortgage.com/blog/understanding-a-3-2-1-interest-rate-buydown

A 2-1 interest rate buy down is a type of mortgage financing where the seller or lender pays a portion of the interest rate upfront, which lowers the borrower’s monthly payments for the first two years of the loan. The interest rate is typically two percentage points lower during the first year and one percentage point lower in the second year. It’s a great way for any Home buyer to purchase a home when interest rates are high so they can make it easier to afford the payment for a few years. And if interest come down they can always refi and lock in a new rate and if they go up same things.

For example, if the regular interest rate on a 30-year fixed mortgage is 5%, a 2-1 buy down could lower the interest rate to 3% for the first year and 4% for the second year. This would save the borrower about $100 per month on their mortgage payment. Real estate interest rates for buying a home have really hurt the real estate buying and selling market. Home owner’s with 3% or 4 don’t want to sell their home because the interest does not come with you and a new interest rate right now is going to be closer to 7%

There are a few things to keep in mind about 2-1 interest rate buy downs:

  • The seller or lender will usually recoup the cost of the buy down over the first two years of the loan through slightly higher monthly payments.
  • The borrower will have to pay an origination fee for the buy down, which can be several thousand dollars.
  • The borrower will not be able to refinance their mortgage for the first two years, unless they pay back the buy down.

Overall, a 2-1 interest rate buy down can be a good option for borrowers who are struggling to afford a monthly mortgage payment. However, it is important to weigh the upfront costs and long-term implications before deciding if a buy down is right for you. I have bought many home’s over my life time and paid as high as 13% but the home cost was 55,000. It still hurt to pay that kind of interest even then so I understand.

I hope this understand what a 2-1 Interest rate buy down is. Interest rates can be confusing for any buyer or seller. Try and work with the right mortgage person and life will be a lot easy. Andy is my go to go and here is his number. Years of experience. 602 821-9295 I hope this will help you. Thank you letmeearnit.com

As of Monday, August 28, 2023, the current average 30-year fixed mortgage interest rate is 7.57%, decreasing 3 basis points over the last week. If you’re in the market for a mortgage refinance, today’s national average 30-year refinance interest rate is 7.80%, rising 5 basis points from a week ago. In addition, today’s national 15-year fixed refinance interest rate is 6.89%, decreasing 1 basis points from a week ago. If your buying or refinancing, Bankrate often has access to offers well below the national average, displaying the interest rate, APR (rate plus costs) and estimated monthly payment to help you compare deals and fund your home for less. With interest rates increasing, it’s more important than ever to compare today’s mortgage interest rates before committing to a loan. Call a lender and see what your rate will be.