Believe it or not, the terms are not interchangeable and there is a HUGE difference in how you are represented and treated in a transaction. When a Realtor is representing you, the buyer, or seller,
Have You Heard Of Temporary Buy Downs
Temporary buy down of the current interest rate is a great way to get a home you want to become affordable. Ease into the larger payments.
Here's the example which isn't too far from where we are at, so a darn good example really.
Year 1 3%
Year 2 4%
Year 3 5%
Take the payment difference between year 1 and 5% plus the difference in year 2 and 5%...prepaid up front...say from sellers concessions.
I'm not a lender, but I have an app, so that makes me dangerously close with numbers. Let's say you buy a 250k home with a 3.5% down FHA program, here's what you expect to pay monthly at the different rates.
250k home at 3% would be about 1272/mo (Principle Interest Taxes Insurance)
250k home at 4% would be about 1406/mo (PITI)
250k home at 5% would be about 1550/mo (PITI)
So you can see the value of doing the Temporary Buy Downs. The question is, who does them? Not a ton of lenders, but I got a guy. :) If you're looking to purchase a home, and you can qualify for the home with the 5% interest rate, why wouldn't you like to save about 280/mo? If you're a new buyer maybe out of college, this might help you get your finances in order, heck....anybody this can help get their finances in order. Let me know if you'd like more information on how it would work.
The Cotton Group of West USA
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