Headlines have been focusing on the average 30-year interest rate topping 6% which was at this same level 14 years ago. Many are comparing the current housing market and the economy to 2008. Back then, the 6% was a good thing—it was a drop from the 7%, and, combined with dropping home prices, made purchasing a home significantly more affordable. Today looking at current home prices which have appreciated 20% since 2021, home affordability is the lowest in 35 years with a 6% interest rate.
2-1 Buydown program is coming back into popularity. Allowing sellers and/or realtors to provide credits toward upfront fees to lower the interest rate up-to 2% for the first two years of the loan. For example, a monthly payment of $2,998 on a $500,000 loan with 6% interest rate. The first year will have a payment of $2,387 based on 4% interest rate and the second year will have the payment of $2,684 with 5% interest rate. The mortgage payment will be $2,998 from the 3rd year on. The sellers and/or realtors will offer a credit of $11,100 at closing to make up the difference in payments which helps buyers to build up equity a lot faster.
Contact me today at 925-216-3618 to find out how the program works and how we can get you into your dream home.
