Rates that Start at 3.5%

In this market, buyers are overwhelmingly concerned about the impact that higher interest rates have on their ability to make payments on a loan and purchase a home. What if you can have a lower rate and a lower payment to start with and the seller pays for it?
What I’m talking about is called a 3-2-1 buydown and although many people in the real estate industry are aware of it from many years ago, most buyers today are not familiar with it and what it can do for them in this market. A temporary buydown is a loan where the interest rate is bought down temporarily for the first year(s) of the loan. This can help you ease into the full mortgage payment and free up some cash flow.

If your current rate today when you purchase a home is at 6.5%, then the seller can give you a credit through the closing of the loan that will pay for the payment difference which will lower your rate to 3.5% for the first year, 4.5% the second year, and 5.5% the third year until it will finally end back at the 6.5%. So if you were to have a loan amount of $700,000, your savings over the 3 years would be $31,306.
Instead of asking a seller to lower the purchase price of a property you are interested in, you can ask them to pay for the buydown cost and in this example, it would be $31,306. If you were to reduce the purchase price that same amount of $31,306, your monthly payment savings would only be $158.31.
The news always seems to be negative regarding real estate, but what buyers need to understand is that it’s about negotiating and leveraging with your real estate professional.
Feel free to reach out to me anytime to go over your situation. Stress Free Mortgage is located at 25115 Ave. Stanford, Suite B220, Valencia. For more information, please call us at 661-295-0555. Stress Free Mortgage is a California Corporation licensed by the Department of Real Estate, License #02012819,. NMLS# 1520664/291429. Also licensed in Texas, Florida and Colorago.

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