🏠What’s a Temporary Rate Buydown?
🏠What’s a Temporary Rate Buydown?
Hey Homebuyers,
In today’s housing market, every bit of savings counts—especially when it comes to your mortgage interest rate. One strategy that can help you ease into your monthly payments is a temporary rate buydown. But what exactly is it?
🔍 What Is a Temporary Rate Buydown?
A temporary buydown is when your mortgage interest rate is reduced for the first 1–3 years of your loan. It’s a great way to lower your initial monthly payments while you get settled into your new home and finances.
The most common options are:
- 2-1 Buydown – Your rate is 2% lower in year 1 and 1% lower in year 2.
- 1-0 Buydown – Your rate is 1% lower in year 1 only.
After the buydown period ends, your rate goes back to the full note rate for the remainder of the loan.
đź’° How Does It Work?
The difference in interest payments for those first few years is paid upfront, usually by:
- The seller
- The builder
- Or even the lender, as part of a negotiated deal
This makes buydowns especially popular in buyer’s markets, where sellers are motivated to help close the deal.
âś… Why Consider a Buydown?
- Lower payments upfront – Helps you adjust to homeownership costs.
- Easier budgeting – Especially if you expect income to increase.
- Can be a win-win – Sellers move their property, buyers save money early on.
Just remember: this is a temporary benefit. Make sure you’re comfortable with the full mortgage payment after the buydown ends.
🔍 Ready to Learn More?
If you have questions about rate buydowns or want to explore your loan options, reach out! I’m here to help guide you through every step of the process.