Many home sellers are now offering to buy down the buyer’s mortgage loan interest rate so that the buyer can afford to purchase the home of their dreams. A buydown is a way for a borrower to obtain a reduced interest rate by paying discount points at closing. Another option, prepaid interest points, are a one-time fee that is paid upfront. For discount points, the interest rate is lower for the loan term. Home buyers may also choose to reduce the interest rate for a specified time period at the beginning of the loan. This arrangement is often paid by the seller at close of escrow.
The buyer benefits from a buy down wit lower monthly payments. New home developers and other home sellers are more likely to pay for the buy-down as an incentive to help the home sell faster. Today, more and more builders offer these up-front payments to entice buyers to purchase properties in their sparkling newly built communities.
A buydown can make a lot of sense if the seller can offer the incentives without significantly increasing the price of the home. The seller may pay only $15,000 to $30,000 to save the buyer $50,000 to $100,000. The terms vary quite a bit, plus there are some state restrictions and FHA restrictions.
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Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Broker CalDRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.
