Purchasing a home is expensive, and fluctuating interest rates may have you wondering if homeownership is worth the investment. While there is no crystal ball to predict rates, there are options if you want to purchase a home with a competitive rate while keeping your mortgage payments manageable. One option is called a Permanent Mortgage Rate Buydown.
What is a Permanent Mortgage Rate Buydown?
In its simplest term, you pay more money at closing in discount points so you can get a lower rate on your mortgage.
Benefits of a Rate Buydown
The most important benefit of a Rate Buydown is that it allows you to qualify for a higher loan amount which equals more home.
Other benefits of a buydown:
- Lower mortgage payments
- Fixed interest rate depending on terms of the program
- Sellers or even relatives may contribute to the buydown fee
- Available on most loan solutions, some restrictions may apply
The Win-Win Scenario of a Permanent Mortgage Rate Buydown
It’s not just you who can benefit from a Rate Buydown. Sellers can get involved by offering to pay to permanently buy down the rate versus reducing the price of their homes. This opens the market to more potential buyers because they will qualify for the mortgage at a lower interest rate.
All mortgage rate buydowns are negotiated between the buyer and the lender.
If you are selling your home, you can offer to buy down a potential buyer’s mortgage rate instead of reducing the purchase price of your home. This will enable more buyers to qualify for the home you are selling and could potentially increase the number of net proceeds you would receive at the closing.
Is a Buydown Right for You?
If you are considering a buydown talk to one of our Axia Loan Originators today.
Equal Housing Opportunity. Axia Home Loans is a registered tradename of Axia Financial, LLC. NMLS 27830.