- Apply Now
- Home Loans
-
Buy A Home
- Refinance
- Mortgage Process
- Nationwide Lenders
- Find a Home
- Find a Loan
- Articles
- Contact Us

- PROGRAMS -

- No Money Down
- Conventional
- Pre-Approvals
- 103% home loans
- 100% home loans
- 97% home loans

- VA home loans
- FHA home loans

- Jumbo Mortgages
- Construction Loans
- Improvement Loans
- Bridge Loans
- Interest Only Loans

Buydown Options

The most common buydown is the 2-1 buydown. In the past, for a buyer to secure a 2-1 buydown they would pay 3 points above current market points in order to pay a below market interest rate during the first two years of the loan. At the end of the two years they would then pay the old market rate for the remaining term.

As an example, if the current market rate for a conforming fixed rate loan is 8.5% at a cost of 1.5 points, the buydown gives the borrower a first year rate of 6.50%, a second year rate of 7.50% and a third through 30th year rate of 8.50% and the cost would be 4.5 points. Buydown were usually paid for by a transferring company because of the high points associated with them.

In today's market, mortgage companies have designed variations of the old buydowns rather than charge higher points to the buyer in the beginning they increase the note rate to cover their yields in the later years.

As an example, if the current rate for a conforming fixed rate loan is 8.50% at a cost of 1.5 points, the buydown would give the buyer a first year rate of 7.25%, a second year rate of 8.25% and a third through 30th year rate of 9.25% , or a three-quarter point higher note rate than the current market and the cost would remain at 1.5 points.

Another common buydown is the 3-2-1 buydown which works much in the same ways as the 2-1 buydown, with the exception of the starting interest rate being 3% below the note rate. Another variation is the flex-fixed buydown programs that increase at six month interval rather than annual intervals.

As an example, for a flex-fixed jumbo buydown at a cost of 1.5 points, the first six months rate would be 7.50%, the second six months the rate would be 8.00%, the next six months rate would be 8.50%, the next six months rate would be 9.00%, the next six months the rate would be 9.50% and at the 37th month the rate would reach the note rate of 9.875% and would remain there for the remainder of the term. A comparable jumbo 30 year fixed at 1.5 points would be 8.875%.

 

Southeast IN: Louisville, Columbus Indianapolis Central IN: Lafayette, Kokomo, Marion Northeast IN: South Bend, Fort Wayne Northwest IN: Chicagoland, Valparaiso Southwest IN: Bloomington, Terre Haute Southern Suburbs Chicago North Shore Northwest Cook County Northwest IL Lake Co. McHenry Co. Western Suburbs Central IL Southern IL Coeur d'Alene, Moscow, Lewiston Boise Pocatello, Idaho Falls, Twin Falls Kauai Hawaii, Big Island, Kona Maui, Molokai, Lanai Oahu, Honolulu, Waikiki Athens, Northeast Ga. Augusta  St. Simons, Brunswick East Atlanta Suburbs Southwest GA North Atlanta Suburbs South Atlanta Suburbs Atlanta Savannah West Atlanta Suburbs North GA, Rome, Dalton, Mountains Macon, Warner-Robins Columbus Northwest: Pensacola, Fort Walton Beach, Destin Central Panhandle: Panama City Lee: Fort Myers Collier: Naples North Broward County: Coral Springs, Pompano Beach Boca Raton, South PB Co. St. Augustine, Flagler Palm Beach, N. PB County Tallahassee, Eastern Panhandle Central: Marion, Lake, Sumter,  Polk Co. Sarasota, Port Charlotte Volusia Co: Daytona Beach Manatee: Bradenton, Brevard: Melbourne Gainesville, Alachua Jacksonville, Amelian Island Orlando, Kissimmee Hillsborough Co: Tampa, Braden Pinellas: Clearwater, St. Petersburg South Broward: Fort Lauderdale, Hollywood Miami, Dade Monroe Co: Key West, Everglades Monroe Co: Key West, Everglades St. Lucie, Martin, Indian River Pasco, Hernando, Citrus South: Beaches, Rehoboth, Bethany, Lewes, Fenwick North: Wilmington Central: Dover Fairfield: Central: Hartford, New Haven Eastern CT: Norwich, New London, Putnam South Suburbs, Littleton, Englewood Eastern Suburbs: Aurora, Kiowa Fort Collins, Loveland, Greeley, Northeast CO West Suburbs: Evergreen, Lakewood, Golden Colorado Springs Woodland Park, Manitou Springs Northern Suburbs: Westminster, Arvada Southwest: Durango, Pagosa Springs Southeast: Pueblo Denver Northeast: Boulder, Fort Collins, Greeley Aspen, Vail, Steamboat Springs Northwest: Grand Junction River Valley, Fort Smith Central Arkansas, Little Rock Delta Region, Eastern Arkansas Timberlands, Southwest Arkansas The Ozarks Ouachitas, Western Arkansas Sun City, Glendale, Wickenburg Scottsdale Yuma Mohave, Havasu City, Bullhead, Kingman Santa Cruz: Green Valley, Tubac Flagstaff Cottonwood, Heber, Payson, Yarnell Pinetop, Show Low, White Mountains Metropolitan Phoenix Prescott Tempe, Mesa, Gilbert, Chandler Tucson, Pima Co. Southeast Alaska Southwest Alaska North Alaska Alaskan Peninsula & Kodiak Isl. Anchorage Fairbanks North Alaska Greater Birmingham Alabama Northern Alabama Southeast Alabama Southwest Alabama, Gulf Coast

 

 
Home Loans - Apply Online - Texas Real Estate - Contact Us - Site Map
www.Texashomeandloan.com (c) Copyright 2001-2012