Here’s how buyers can lower their payments in today’s crazy market.
Is now the time to purchase a home? We asked one of our preferred lenders what today’s buyers could do about rising interest rates, and they suggested buying mortgage points. Today we’ll share a quick example of how interest rate buydowns work.
To keep things simple, let’s say you have a loan for $500,000. If you buy down one point for your interest rate, it will cost you 1% of the total cost, which is $5,000.
“Once you pay back the upfront cost, you’ll save tons of money. ”
Without buying down your rate, your monthly payment at a 5.625% rate would be around $2,878. With the rate buydown, your rate would be 5.25%, and your monthly payment would be $2,761.
If you pay two points, your upfront cost increases to $10,000, but your rate falls to 4.875%, and your monthly payment would be $2,646. That’s a monthly savings of $232. After 43 months, you’ll have paid back the upfront cost and will only save money moving forward.
As you can see, mortgage rate buydowns are a great option for people who can afford them and plan to stay in their homes for a long time. If you have questions, please call or email us. We look forward to hearing from you!
