Buying Down Your Mortgage Interest Rate, Is It Worth It?
Using A Buy-Down To Maximize Your Buying Power!
When you’re thinking at buying a new home, there are many factors that you should consider. One of the most important considerations is how interest rates will affect your borrowing power and your monthly mortgage expense. A higher interest rate can reduce the amount of a loan that you can afford.
What if we could minimize the impact of rising interest rates with buying down the interest?
You can save money on your interest rate by paying an upfront fee in exchange for a lower rate. It's called "rate buydowns," and it increases your closing costs but will reduce how much you pay every month towards the mortgage!
This will allow you to buy your home at a rate to qualify for the house of your dreams. A rate buydown is when you pay an upfront fee for a lower interest rate. This increases the costs at your closing however it might make financial sense for many buyers. Buying down the interest rate can be a good strategy for buyers especially if you intend to own it a long time.
There are different ways you can do a rate buydown.
The first is a simple payment with higher closing costs upfront and lower the interest rate. The second way is to have a temporary buydown that is set for a period of 2 to 3 years. However, if the buyer doesn’t refinance, then their interest rate returns to a higher rate.
Does it make sense for you to buy down your loan? Let's discuss your goals and come up with the correct answer for you. The good news is that you have options which is always a good thing.
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