2-1 Buydown / Rate Reduction
What is a 2-1 interest rate reduction?
At close of escrow the interest rate on your home loan is reduced 2% the first year and 1% the second year. The remaining years of the loan the rate will be the rate you received at the time your loan was "locked" and escrow closed. For example, if you closed escrow and your loan rate was 6.5%, the first year of the loan that rate would be reduced to 4.5% and the second year your rate would be 5.5%. From year three forward your rate would remain at the original locked rate of 6.5%.
Example: $415,000 30 year fixed rate loan at 6.5% interest: First 2 years interest paid = $53,366
|
Year
|
Interest Rate
|
Interest Savings
|
|
One
|
4.5%
|
$8,300
|
|
Two
|
5.5%
|
$4,157
|
|
Total Savings
|
$12,457
|
A major advantage of the 2-1 interst rate reduction plan is that you qualify at a below market interest rate which makes it easier to purchase the home you really want!
What are the costs to a buyer for this plan?
None - there are no additional costs. There isn't even a prepayment penalty. When you view our "Featured Listings" link look for those properties* offering the 2-1 interest rate reduction and then call to see how much we can save you.