Interest Rate Buydowns
An interest-rate buydown is a tool to help you qualify for a larger loan and purchase a higher-priced house than you could under normal circumstances. A buydown allows you to pay extra (tax-deductible) points up front in return for a lower interest rate for the first few years. Often, people relocating for employment obtain buydowns because employers sometimes pay the extra points as part of a relocation package.
While the most common way of obtaining a buydown is by paying extra points up front, many mortgage companies now increase the note rate to cover the cost in later years.
The most common is the 2-1 buydown, which can cost 3 additional points above current market points. During the first year of the mortgage, the interest rate is reduced by 2 percent and 1 percent the second year. So if you get a 7 percent interest rate on a 30-year fixed mortgage, you’d pay 5 percent the first year, 6 percent the second year, and 7 percent for the remaining life of the loan.
Another option is the 3-2-1 buydown. This reduces the mortgage rate 3 percent the first year, 2 percent the second and 1 percent the third. Thereafter you pay the full rate.
Some programs are “flex-fixed” buydowns that increase interest at six-month intervals instead of annually.
Weichman Real Estate is a well-established real estate firm, operating since 1947, and is now in its third generation. We offer a full range of real estate services from our regional office in Costa Mesa and another office in Irvine. We take pride in meeting the customized needs of our clients, with deep roots in the county since 1976. Our main goal is to provide a trusted, responsive, and convenient service, making us an excellent alternative to large, nationally-based companies. Additionally, Weichman Real Estate is committed to serving the community, having donated hundreds of hours to many area charities. Our dedication and quality service have earned us the prestigious title of one of the top real estate companies in Costa Mesa. If you’re interested in Orange County, turn to the experts at Weichman Real Estate. Let us help you make your real estate buying or selling dreams come true. You can call us at 714-241-4532 or email us at Larry@WeichmanRealEstate.com. #WeichmanRealEstate #Weichman #LarryWeichman #Experience #LarryTheRealtorGuy #CostaMesa #openhouse