As we begin 2024 it’s an even better time to buy as interest rates have decreased from the highs we experienced last year. This improves affordability, and for anyone considering purchasing a home, there is a lending product that can lower the rates even further: 2-1 buydowns.
A 2-1 buydown works by putting money upfront to lower your mortgage interest rate for the first two years of your loan. The first year, your rate will be about 2% lower; the year after that, it will be about 1% lower. Then, it will return to normal. This is a fantastic way to ease into your mortgage payment and lower the upfront cost of your loan.
Many sellers are willing to offer concessions to ensure they don’t have to lower their asking price, especially if you have a good agent negotiating for you. This means you can have your seller pay the upfront cost of your 2-1 buydown.
Also, you can refinance when rates come back down. While we probably won’t see rates as low as 3% or 4% again for quite some time, most experts agree that interest rates will continue to decrease over the next one to two years. This timeline fits perfectly with a 2-1 buydown. When your buydown is set to expire, you can refinance to a lower interest rate.
We have great experience negotiating 2-1 buydowns for our clients. Please let us know if you’d like to discuss in more depth.
