Will a Temporary Buydown Help Home Buyers?

Living in an inflated market, mortgage rates have steadily increased. However, while rates are higher, that does not necessarily mean buyers have to wait to purchase a home. A solution that has been growing in popularity is a temporary buydown, which allows buyers to purchase their dream home without putting additional pressure on their bank account.

What is a Temporary Buydown?

A temporary buydown is when a party in a mortgage loan transaction (such as a seller or a builder) pays to have the interest rate temporarily lowered for the first few years of a mortgage. Buyers are qualified for the loan with the long-term permanent interest rate, but receive a lower interest rate temporarily.

One of the most popular buydown types is the 2-1 buydown, where the interest rate is lowered by 2% for the first year of the mortgage and then 1% the second year. Then, by the third year, the interest rate goes back to normal.

Will a Temporary Buydown Help a Homebuyer?

This mortgage type ultimately helps buyers manage mortgage payments. If you are interested in purchasing a home, but worried about the recent increase in interest rates and how it would affect your monthly payment, then a buydown could help in the short-term and free-up cash. Many buyers will put the extra funds towards home improvements, purchasing furniture & appliances, or landscaping.

How Can I Start the Process?

The best thing home buyers can do right now is sit down and talk to a Mortgage Planner about your options. We want to help buyers in this current market however we can, helping you find a solution tailored to you and your family’s needs. Contact one of our experienced and local Mortgage Planners to learn more and to start the pre-qualification process.


Tammy Zurfluh

SVP Mortgage Banking

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