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The Broker, Call
206-200-LEND
(5363)
Friday, October 20, 2017
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Interest Rate Buy Downs

In certain markets, Interest Rate Buydowns may be available. In general Buydowns this is how they work. Payments are reduced and figured on a lower interest rate over a specific term. The difference between the “real” note rate and the lowered interest rate is paid in cash by the seller or the buyer. The more common buydowns are 3-2-1 and 2-1.

For example, the 2-1 Buydown with a loan amount of $350,000 which has a fixed interest rate 6.75% for 30 years. To “buy down” the interest rate, the cost would be a lump sum of $8,063.

  1. First-year interest rate is 4.75%, monthly payment is $1,826.
  2. Second-year interest rate is 5.75%, monthly payment is $2,043.
  3. Years three through 30, interest rate is 6.75%, monthly payment is $2,270.
    • 1st-year savings (as compared to $2,270 per month) is $444 per month or $6,332.
    • 2nd-year savings (as compared to $2,270 per month) is $228 per month or $2,731.

Add up the annual savings: $6,332 + $2,731 = $8,063. Therefore, it costs $8,063 to buy down the interest rate and payments for two full years.

Contact your mortgage professional to discuss the availability of these options for you

Evergreen State Mortgage MB-98904 | Ph: 206-200-LEND(5363) or ph 2: 425-867-1313 | fax: 855-867-1414
Financeman@EvergreenStateMortgage.com
A DBA and Branch of Evergreen State Advisory Services, Inc.
8201 164th Ave NE, Suite 200 | Redmond, WA 98052
Copyright © 2017 Evergreen State Mortgage. All Rights Reserved | www.nmlsconsumeraccess.org

Evergreen State Mortgage MB-98904 | Ph: 206-200-LEND(5363) or ph 2: 425-867-1313 | fax: 855-867-1414
Financeman@EvergreenStateMortgage.com
A DBA and Branch of Evergreen State Advisory Services, Inc.
8201 164th Ave NE, Suite 200 | Redmond, WA 98052
Copyright © 2017 Evergreen State Mortgage. All Rights Reserved | www.nmlsconsumeraccess.org