Do You Understand Buydowns?
This strategy can benefit both buyers and sellers — and it’s simpler than you think!
A 2-1 buydown is like getting a discount on your mortgage payment for the first two years. In Year 1, you get the biggest savings — kind of like your loan is on sale! In Year 2, the discount is smaller, but still helpful. By Year 3, you're at the full payment — like riding a bike without training wheels.
Here’s a quick example:
Let’s say the current interest rate is 7%.
-In Year 1, your rate would be 5%
-In Year 2, it bumps to 6%
-In Year 3 and beyond, it levels off at 7%
(unless you refinance when rates drop!)
Why it works:
-Buyers get lower payments up front, easing the transition into homeownership.
-Sellers can offer a credit to cover the buydown cost — often less than the price reduction needed to attract buyers, while making a bigger impact on affordability.
Win-win for everyone.
Why should you care?
If you are considering a move, know that this can be a tool to entice buyers. This can also be a tool to benefit you when you buy a new home.
Contact me to have a lender play out this scenario for you!
