Dan Hubrich with Castle & Cooke Mortgage is back! Today he is discussing a loan program that is not used often, but could be a viable way to make a home purchase a bit more affordable.

This month I’d like to talk about a strategy that doesn’t get used much but it’s a great opportunity to make a new home purchase more affordable. It’s a loan program called the “2-1 Buydown”. In a nutshell, the lender collects an upfront fee at closing, but then you would have an interest rate that is a full 2 points lower for the first year and then 1 point lower for the 2nd year. Then starting in the 3rd year and for the remaining life of the loan, it would be the normal rate. The advantage of this program is that it allows borrowers to get into a home now that may be a little out of their payment comfort zone, but it gives them time to be in a better position to afford it later. Perhaps you know you’ll be getting a raise in the future, starting a better job, you may be inheriting some money, or your business will be doing better, etc. etc. Those are the perfect scenarios for this type of loan. On a $300,000 loan amount the savings is significant. The payment would be about $330/month lower the 1st year and about $175/month lower the 2nd year. 

The only caveat with this program is that the seller does have to be the one that pays for it. That can all be negotiated in your offer though and you can even offer a higher price to offset the cost if needed. Talk to your Realtor about strategizing something like this but it’s just one more idea to help you take advantage of amazing rates and home prices NOW vs waiting for a year or two. 

Contact Dan or myself for more info!