Check out this example of how a 2/1 buydown can help make your mortgage payment more manageable.
Below is a 2/1 buydown example for a purchase of $750k, with 20% down, 760 credit rating. Here we can see the value in the 2/1 program when making offers at list price or slightly higher as opposed to dropping the sales price. The numbers below will show the program has a savings of $13,822.32 in the first 24 months.
- The seller credits are used to satisfy this cost, and the $13,822 is put into an escrow account for the buyer.
- The buyer can refinance into a ‘forever rate’ after the first 6 months, when rates are 5% or better.
- When the client refinances after the first 6 months, the escrow account will still have $9,252.26.
- The remaining $9,252.06 is applied to the refinance paying the fees and buying down the loan if able.
- The buyer may have a true “no fees” refinance when using the 2/1 buydown
- Remember: The buyer can enjoy lower payments from 4.75% in the first year.
- If the buyer doesn’t refinance the first year, the rate goes up to 5.75% the second year.
- The third year it will mature to 6.75% if the buyer hasn’t refinanced yet.
- We anticipate rates to drop by April 2023 or sooner possibly.
- Buyers need to make 6 mortgage payments before refinancing.
Info provided by Eric Atilano of Resident Lending & Realty