Mortgage Buydowns have been around for years, but became a seldom used tool when interest rates hit historic lows. Now that interest rates have normalized this could be an option to discuss with your lender to see if it is right for you. Seller’s should also consider offering mortgage buydowns as a concession in lieu of a price reduction.
What is a Mortgage Buydown?
Cash paid up-front placed in an escrow account with the lender to be used to pay part of the monthly mortgage payment, for anywhere between one and three years.
How Does it Impact Monthly Mortgage Payments?
A Mortgage Buydown will have a greater impact on the monthly payment for the term than a price reduction of the same dollar amount. While a price reduction will be spread across the full life of the loan (15-30 years), the Mortgage Buydown benefit is concentrated in the first 1-3 years.
For more information about Mortgage Buydowns, check out this article: Mortgage buydowns are the hot new thing helping the housing market CLICK HERE
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