What is a 2 - 1 Mortgage Interest Rate Buydown | Pros & Cons
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- เผยแพร่เมื่อ 14 ม.ค. 2025
- When interest rates are sky high you will hear a lot of Realtors & Lenders talking about the 2 - 1 Interest Rate Buy Down that allows home buyers to pay a lower monthly mortgage payment for the first 2 years of their home loan.
This video will cover how the 2-1 buydown works as well as some of the pros and cons of the buydown, and the variables to consider when deciding if it’s something you would like to try for with your home purchase.
Here is a link to the free 2 -1 Buydown Calculator that you can download with no personal information:
tinyurl.com/bu...
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Scott Hodge Broker | Owner | Veteran US Navy
Homeport Residential
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Email: Scott@Homeportresidential.com
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Hey guys you can get real cash back to cover your closing costs when you buy a home nationwide! See how much cash back your home purchase would qualify for here: www.homeportbuyersrewards.com
Is it worth choosing a 2-1 buydown for 5-6-7 interest rates, considering the current market conditions and the expectation that interest rates will decrease within a year and refi ?
Thanks for your question Dheeru. You can still refi a 2/1 buydown any time and any of the unused subsidy gets credited toward your loan balance. The only downside to a 2/1 buydown is that you could use the money for the buydown for other things. Always make certain you can afford the mortgage payment at the Original or Higher interest rate. I would be happy to take a look at your loan estimate or answer any other questions you might have. Scott@homeportresidential.com 858-255-1943
Thank you :) Sure, I will reach out to you soon.@@HomeportResidential
Thank you!👍💪
Always happy to help! Best of luck with your home purchase!
Is this something you ask your loan officer or your agent first?
Thanks for the question XenomorphLV426 :) You would ask your real estate agent, because they will request the credit from the sellers to pay for the buy down. Keep in mind, if the market is hot in your area it can be challenging to get sellers to pay for credits like this.
Can the buyer pay for this option?
Hey Stacy thanks for your question. Yes the buyer can pay for their own 2-1 buydown, however if that is something you are considering you would be better off putting that money in an interest bearing bank account. I would be happy to go over your question in more detail if you like, feel free to email me at Scott@Homeportresidential.com or call me. My number is in the description section.
No
Hello. So if the interest rate gets lower at any time during the first or second year we (buyers) can refinance to get the lower interest rate?
Hello godsangel2429 and thank you for the question. Yes if the interest drops any time after you purchase your home you can refinance to a lower rate. This is true whether or not you choose to go with an option like the 2 / 1 buy down. While many experts do expect interest rates to come down in the next year or two, there is no guarantee, so I always advise people to never buy a house with a payment higher than they can afford. You can also email, text or call me if you have any other questions. Scott@HomeportResidential.com 858-255-1943
How much does it cost for 2/1 buy down?
Hello Smart Way and thank you for your question. The answer is...It Depends on your home's purchase price, and how much your lender charges for interest rates. My advice is to always buy a home with a mortgage payment you can afford at the higher interest rate, because you never know when interest rates will come down again and it could be a very long time until you're able to refinance your loan.
What would you suggest in this situation? I own a million dollar home that is fully paid for. I want to buy another million dollar home next week but that doesn't give me enough time to sell my existing one. So, I have to get a mortgage on the new home to buy before it is sold to another buyer. It's not a problem, I can afford the down and will qualify for the new mortgage. I then sell my fully owned million dollar home in a month. I want to take that million dollars and pay off the mortgage I have open on the new million dollar house and be debt free again. Is it best to get a 30 year mortgage with no pre-payment penalty or is there any benefit to shop for other types of mortgage products out there?
Thanks for your question Sound Designer. Generally speaking when you are talking about loans for periods of less than 1 year, you would consider what’s called “Bridge Loans”. You would want to reach out and connect with a bank that specializes in that type of lending.
@@HomeportResidential Thank you very much for opening my eyes to Bridge Loans. 55 years. Perfect product for me.