Dear Homebuyer-Have you considered these facts Part 2?
I heard this today on several social media sites:
- Divorce Your Landlord
- Marry The House
- Date The Rate
What I believe they are referring here to is if you are waiting to buy because the interest rate is 7% you may be waiting awhile ! You should stop renting, find a your beautiful dream home & find a seller or new home builder that will buy down your interest rate for a few years.
If you are currently renting at $2,500.00 and you pay that over the next 5 Years you will have spent $150,000.00 with no return on your investment. If you find a home that the seller or new builder will buy down your interest rate you can refinance the home in a few years if the interest rates go down. In the meantime you are building your equity so when you sell your home will have appreciated and you will get a good return on your investment!
What is a buydown ?
A buydown is a way for a borrower to obtain a lower interest by paying discount points at closing. The interest rate is lower for the loan term.
There is also a 2-1 buydown that lowers the interest rate on a mortgage for the first two years before it rises to the regular permanent rate. The rate is typically two percentage points lower during the first year and one percentage point lower in the second year.
Is it smart to buy down an interest rate?
That is a question that is up for debate! I am not a mortgage lender so find a trusted mortgage lender that can explain it to you. I think if you expect the interest rates to go down in the future, you may not need a buydown, as you will have the option to refinance your home in the future.