Let's Get the Lowdown on Buydowns

When mortgage rates increase, buying power decreases but this doesn’t mean you need to sit on the sidelines. If you are wanting to buy now, a temporary buydown might be just the solution you are looking for.

So How Does it Work?

A 1% difference in mortgage rate might not seem that significant, but it can add thousands to the total cost of a loan and increase a monthly payment by enough to keep home ownership out of reach for many. For some borrowers, 1% is a huge hurdle to affordability.

Buydowns are a seller concession so, as a buyer, you don’t pay the associated costs. This is a seller-paid incentive covered by home sellers or builders, so you’ll need to ask for the buydown when negotiating the home sale.

If the seller agrees to a temporary buydown, they’ll pay your lender the difference between your original mortgage rate and the reduced rate. Buydowns are not just advantageous to the buyers. It is generally more cost-effective for sellers, helping them gain a bigger net profit compared to reducing their asking price.

We are happy to answer your questions and run through some real-life scenarios if you are interested to see how this can help you reach your home ownership goals!