How a new house CAN fit into your budget!

A 2/1 buydown is a financing strategy that can temporarily lower a buyer’s mortgage interest rate for the first two years of homeownership.

Here’s how it works: the buyer still qualifies for the loan using the full, permanent interest rate, but money contributed upfront—often by the seller, builder, or another permitted party—is placed into an account to help reduce the buyer’s monthly payments during the first two years.

For example, if the permanent mortgage rate is 6.5%:

• Year 1: the payment is calculated as though the rate were 4.5%

• Year 2: the payment is calculated as though the rate were 5.5%

• Year 3 and beyond: the payment is based on the full 6.5% rate

Why can this be attractive? It gives buyers lower payments during the first couple of years, when they may be adjusting to a new mortgage, moving expenses, furnishings, or other costs of homeownership.

For sellers, offering money toward a 2/1 buydown can sometimes be more appealing to a buyer than simply reducing the sales price. A relatively modest concession may create a noticeable difference in the buyer’s monthly payment.

A 2/1 buydown isn’t the right fit for every loan or every buyer, so it’s important to review the numbers with a knowledgeable lender.

Thinking about buying or selling? I’d be happy to help you look at the options and determine which strategies may make the most sense in today’s market.

SuAnne Hoffman | Associate BrokerKeller Williams Westfield Real Estate801-360-3900