Here’s what buyers in our market need to know about 2-1 buydowns.
“How can I deal with higher interest rates?” People have been asking me this question a lot recently, and I understand why. Just a year ago, you could easily get a rate as low as 4%. Now, rates are much higher, and many potential buyers are feeling discouraged. What can you do to lower the impact of higher rates?
One option that’s been working fantastically for many of our clients recently is using a 2-1 buydown. Essentially, this is a loan product most lenders offer where you’ll receive a reduced interest rate for the first two years of your loan for an upfront fee. So the first year of your loan, your rate will be reduced by 2%. In the second year of your loan, your rate will be reduced by 1%.
2-1 buydowns work so well because they allow you to ease into your monthly payment. However, the benefits don’t stop there. Right now, many sellers are offering generous concessions to attract buyers. If you work with a great Realtor, like one of the many agents on my team, it’s very likely that your seller will agree to pay the upfront cost of a 2-1 buydown for you. That means you’ll have a reduced mortgage payment without paying a dime.
“You can have a reduced rate now and simply refinance when rates fall.”
This may sound pretty good already, but it actually gets better. While I do have a crystal ball, my wife, KodiKay, lost the batteries. And many experts agree it is likely that interest rates will come back down in the coming years. This means you can have a reduced rate now and simply refinance when rates fall.
In fact, one of my lending partners is offering a special deal right now. If you work with them, they’ll allow you to refinance for free when rates come down. This is a win-win situation. You’ll receive a lower rate now at no cost; then, you can refinance when rates fall, also at no cost.
I know higher rates have a lot of homebuyers down right now, so I wanted to make sure you understand that you have options. If you have questions about today’s topic or anything else, don’t hesitate to call or email my team. We’d love to hear from you!
