A Home Loan To Help You Buy Despite Rising Rates
Mike Lenz of Fairway Mortgage shares how a 2-1 buydown program works.
One of my favorite lenders, Mike Lenz of Fairway Mortgage, joined me today to share with us their new program. It’s called the 2-1 buydown, and it’s designed to help buyers cope with rising interest rates.
The 2-1 buydown reduces the interest rate for the first two years of the program. With our current rate of 6.5%, someone who opted for a 2-1 buydown would pay for a 30-year fixed loan at a 4.5% rate for the first year, a 5.5% rate the next year, then 6.5% from the third to the 30th year. It's a great way to minimize some upfront costs.
It’s currently gaining popularity because there's a widespread belief that we will be in a recession in the next 12 to 24 months. People can take advantage of it, and refinance their current loans after 6.5% to a much lower interest rate in the future. It’s gaining so much traction; I had two closings in October that chose to go this route.
"It's a great way to minimize some upfront costs."
It can help so many buyers, especially the ones that may have been priced out of the market. It’s fixed for 30 years, and they can get the benefit of a two points reduction in their first year. The market is normalizing right now, and buyers don’t have to offer $50,000 to $100,000 over the list price. On top of that, they can keep the list price or the purchase price further down.
If you have questions for Mike, call him at (608) 228-7252 or visit his website here. Also, if you need help with your real estate plans, don’t hesitate to give me a call or send an email. I’m always happy to hear from you!