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Ultimate 2-1 Buydown Guide

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The Ultimate 2-1 BUYDOWN Guide!

Affordability is a key issue facing both homebuyers and home sellers. For homebuyers, providing affordability options makes the purchase of a home possible. And for home sellers, more affordability creates demand for their home and ultimately can result in a higher net profit.

A mortgage rate buydown might be the solution that creates a Win! Win! for everyone. This strategy lets the homebuyer lower their interest rate on the mortgage in the beginning of their new loan.

► What is a Rate Buydown?

There are 2 types of rate buydowns: Permanent and Temporary. You are probably familiar with permanent buydowns where you pay an additional fee for a lower rate on your mortgage loan. Temporary buy downs also reduce the interest rate, but only for the early years of the loan. For example: a 2-1 buydown, lowers the interest rate by 2% in the first year of the loan, and then lowers it 1% in the 2nd year of the mortgage, hence 2-1 buydown.

→◉ Permanent vs Temporary Buydown Benefits

Permanent Buydown:

  • Pro: Life of loan rate discount providing peace of mind.
  • Con: The cost can take 3-6 yrs to recoup and realize the benefits. Refinancing early in the loan can create a situation where no savings were realized.

Temporary Buydown:

  • Pro: Significantly more savings in the first years of the mortgage. Unused funds can be applied back to principal reduction if you refinance.
  • Con: The rate reduction is temporary, determined by type, either 1-0, 2-1, or 3-2-1 buydown.

Included Resources Attached to this Presentation:

⚡The Ultimate 2-1 Buydown guide -

  • A PDF guide explaining all the ins and outs of the buydown option. With detailed explanation of how they work and a closer look through examples.
  • The pro's and con's of the program and steps to take when getting started and exploring this option.

⚡Offer Benefits of 2-1 Buydown Presentation -

  • This is an actual counter offer to a homebuyers offer on a home with a significant reduction in the sales price. For the home seller they needed more affordability in order to feel comfortable with purchasing this home. My team, with the listing agent and sellers, were able to show them a more affordable solution through the 2-1 buydown that let the seller retain more of their equity and ultimately make it work for all parties.

⚡Win! Win! (Buydown Strategy) -

  • A Sample Presentation that we put together as rates started to rise and affordability began to be an issue for homebuyers in the market place. It explains to REALTORs how this strategy could help sellers to create more demand for their property by providing a more affordable option for potential home buyers without an extensive loss of equity and profit.

Learn how this strategy not only makes homeownership more affordable for buyers but also benefits sellers by attracting more interested purchasers. A home purchase is a large and complex transaction. Reach out if we can provide any clarity or run you the numbers specific to your situation. Let us help you explore the different options and scenarios and see how different strategies can make a difference in your real estate journey!

⚡ The YourLoanPro Team ⚡


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