Why the 321 is Your New Best Friend

We all know the market has shifted, but what you might not know is that it’s still affordable.

Purchasing a home is an exciting and daunting experience, especially for first-time buyers.

There are many types of loans available to help make the purchase process easier, and one of the most beneficial options available to home buyers in this shifting market is a 3-2-1 Buy Down Home Loan.

Quick history - this loan only comes into fashion when interest rates are terrible! Remember COVID loan rate dates of 2.75%? We won’t be seeing rates that low for a long time. But it doesnt mean you need to pay 7% either.

Enter the 321. Your new best friend.

FAQ’s:

What is the loan product name?
3-2-1 Buydown or Interest Rate Buydown

What does it do?
This loan type allows borrowers to pay an upfront fee in exchange for a lower interest rate on their mortgage loan.

The name “321” comes from the fact that the fee is split into three payments over three years.

During the first year, the borrower pays 1% of the loan amount; during the second year they pay 2%; and during the third year they pay 3%. These payments are spread out over each 12-month period, and they reduce the interest rate by 0.25%, 0.50%, or 0.75% respectively during each of those years.

Where do I get the upfront fee for the rate decrease?
For my clients, I always negotiate this money from the seller. This is a perfect market for such an occasion!

What are the benefits compared to a regular loan?
For first-time home buyers, this loan option provides numerous benefits that make it worth considering.

First and foremost, it reduces your monthly payment amounts in the short term by lowering your interest rate throughout those first three years after you purchase your home.

Additionally, if you plan on moving within five years of purchasing your home, you can save money because you won’t be paying as much interest overall—which means you may also be able to put more money toward other costs associated with selling or buying another house.

Finally, this type of loan helps protect against rising interest rates in case market conditions change in future years; so even if rates go up after you purchase your house, you will still have those low payments locked in for at least three years!

Conclusion

When it comes to financing your first home purchase, there are many options available—and one such option is a 3-2-1 Buy Down Home Loan. This type of loan offers several advantages that can make life easier for borrowers by reducing their monthly payment amount in the short term while also protecting them against potential rises in interest rates down the road.

If you're looking for financing options when buying your first home, then consider researching this particular loan option to see if it's right for you!

Just imagine, you could be gathered around a fire pit at your new home with loved ones in less than 60 days from now. Not a bad view.

Resources:

Julie Johnson
VP Branch Manager
Cross Country Mortgage WA

Source:
Bankrate and various trusted lenders