Videos

Lower Your Mortgage Rate Now with a Buydown

If you’re hoping to buy a home, but are feeling deterred by mortgage rates that stubbornly refuse to come down, you can take a deep breath. There are ways to ease those rate-related concerns.

One option is called a mortgage rate buydown. With a buydown, you may be able to get a lower payment rate from your lender for the first few years of your home loan, allowing you to ease into your new home.

Another way to do a buydown is to pay a little extra upfront to buy down the interest rate. In some cases, the seller may be willing to buy down the buyers’ rate as well.

“Interesting programs that have come about are 1-0 buydowns,” said New American Funding Senior Vice President of Growth and Expansion Mosi Gatling.

That means in the first year of the loan, someone receives a payment rate that is a full point lower than current rates and then goes up after that first year to the rate the borrower locked in when they took out the loan.

“Then you’ll be at your permanent rate and payment for the rest of the life of the loan,” said Gatling.

Mosi Gatling NMLS# 557166