Rockford Real Estate-Buy Down Mortgage
A great option for a newly established borrower, like a recent college graduate!
HOW THE 2-1 BUYDOWN WORKS:
- For the first 2 years of your loan, you get a lower, more affordable interest rate, which might help you get into your dream home sooner!
- In year 3, your payments are fixed for the remaining life of your loan, removing all uncertainty of future increasing payments associated with an adjustable-rate mortgage (ARM).
You, your builder, or the seller sets aside some of your principal and interest on your mortgage, in exchange for a discounted interest rate for the first two years of your mortgage.
- In year 1, the interest rate is bought down 2% below the rate on your mortgage note.
- In year 2, the rate increases to 1% below the note rate.
- In year 3, the interest rate increases to the full rate as required by your note, and it stays at this fixed rate for remaining 28 years (years 3–30).
If the interest rate on the mortgage note is 6%, then with a 2-1 Buydown Mortgage:
- In year 1, the interest rate will be 4%.
- In year 2, the rate will be 5%.
- In years 3–30, the rate will be the full 6%.
- Available for 30-year, fixed-rate Conventional, FHA, and VA programs.
- Minimum FICO credit score is 620.
- Purchase only, and it must be owner-occupied.
- The buydown account is established at closing and can be funded by the buyer, seller, or builder. The maximum seller or builder contribution is 6%.