Sunday, May 26, 2024
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Phil Joseph
Branch Manager
Sr. Mortgage Loan Originator
Over 30 Years' Experience
Movement Mortgage 
Rancho Bernardo Branch
11770 Bernardo Plaza Court #451
San Diego California 92128

Direct: 619.507.3558
Fax: 858.430.2557
Email: Phil@PhilJoseph.com
Website: www.PhilJoseph.com
NMLS# 249549
 
Licensed in California by the Department  of Business
Oversight under the Residential Mortgage Lending Act 417-0015 
 
Movement Mortgage may not be the lender for all products offered on this website. Some loans may be made by a lender with whom American Pacific has a business relationship. Equal Housing Opportunity.
 
Phil Joseph
Branch Manager
Sr. Mortgage Loan Originator
Over 30 Years' Experience
Movement Mortgage 
Rancho Bernardo Branch
11770 Bernardo Plaza Court #451
San Diego California 92128

Direct: 619.507.3558
Fax: 858.430.2557
Email: Phil@PhilJoseph.com
Website: www.PhilJoseph.com
NMLS# 249549
 
Licensed in California by the Department  of Business
Oversight under the Residential Mortgage Lending Act 417-0015 
 
Movement Mortgage may not be the lender for all products offered on this website. Some loans may be made by a lender with whom American Pacific has a business relationship. Equal Housing Opportunity.

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