Have You Heard Of Temporary Buy Downs

Dated: 08/15/2018

Views: 154

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.


Stephen Cotton

The Cotton Group of West USA

623.236.5843

[email protected]

Latest Blog Posts

Jumbo Loan With Out The Jumbo Red Tape One Lender I Know Removing The MI With Low Down Payment

So....I have a lender guru friend that has a package deal for larger home purchases.  As prices continue to raise, it only benefits to educate yourself on some or all of the options.  Most

Read More

Escalation Clause To Win A Home Or Is It Even Worth It

What is an escalation clause?It's Buyer 1 saying I will pay X amount of dollars above your highest offer. Buyer 2 is at 250kBuyer 3 is 255kMeans at the end of the negotiations we are paying X

Read More

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

Read More

The 5 Key Components Of A Credit Score

There are five key components of a credit report that affect your overall score. 1. Delinquencies-  Making your payments on time is important for having a good credit score. This is 35% of

Read More