Here’s what buyers and sellers need to know about 2-1 buydowns.
Here we are in 2023, and the future seems so bright that you might need shades! Let's talk about the real estate market—a year ago, interest rates were at 3% or 4%, and now they're around 7.5%. So, what does this mean for you?
In the face of rising rates, we’ve been using 2-1 interest rate buydowns. What does that entail? If rates are at 7.5% and you buy your rate down by two points, your rate in the first year becomes 5.5%, then 6.5% in the second year, and finally levels out at 7.5% in the third year. Between 2024 and 2026, there's a good chance you might get a rate break and can consider refinancing.
"2-1 buydowns can be your secret weapon."
What does this mean for sellers? It allows you to sell your house today with a 2% loan cost. For instance, if your buyer has a $500,000 mortgage, buying down the rate would cost around $10,000. This option is more favorable than continued price adjustments to attract buyers.
It means that you're in a strong position this fall, with less competition in the market as more inventory becomes available. You can secure a mortgage at a lower rate while facing fewer competing buyers. The 2-1 buy-down becomes your secret weapon.
Using this strategy, you can get the home you want today instead of waiting around for rates to drop. Call or email us if you’re interested in buying or have questions about this market. We look forward to hearing from you!