An Alternative to Adjustable Rate Mortgages

Are you thinking of selling your home and looking for ways to incentivize buyers during these higher interest rates? Consider a 2-1 buydown. What is a 2-1 buydown? It is a type of financing offer to reduce the interest rates in the first two years of a mortgage. If you use this program, the buyer receives an interest rate that is reduced by 2% for the first year, and 1% for the second year. For the third year, the mortgage interest rate goes back to the original interest rate on the loan, but this gives time for new homeowners to adjust to the higher payments. So, what are the downsides to this program? First of all, it can be pricey for the seller, as they have to purchase points from the mortgage lender in order to reduce the interest rate. Second, this is only a temporary fix for the buyers. After two years, their interest rate will go back up to the original rate. The main benefit of this program is to incentivize buyers towards your property, and for buyers, it is a great alternative to an adjustable rate mortgage. Would you consider using using a 2-1 buydown? We have mortgage lenders that we trust and work with regularly. We can help to educate you on your options. If you want more information on this type of mortgage program, please give us a call today at  952-474-2999.