TEMPORARY RATE BUYDOWNS
Get a HUGE break from rates with a seller-paid Temporary Rate Buydown.
2.99%
Sellers give the buyer a credit at closing to reduce their starting interest rate by up to 3%
An escrow account is created for the buyer to pay towards their mortgage with buydown funds provided by the seller.
Funds from this credit go towards the buyer's mortgage each month, dramatically reducing their overall payment.
The principal balance of the loan is paid down at the same pace, whether or not there is a buydown in place.
The buyer's interest rate slowly returns to normal by 1% max each year, until all funds from the escrow account are depleted.
Note: “Temporary Buydowns” can be for 1 year, 2 years (a “2-1 Buydown”) or for 3 years (a “3-2-1 Buydown”)
A seller lists her home for $1,000,000 but gets no offers. She has two options: (1) she can reduce her list price to entice more buyers; or (2) she can offer a seller-paid temporary rate buydown, which is often more enticing for buyers and less expensive for sellers.
The below chart outlines the monthly savings for a buyer who purchases a $1,000,000 home at a 7.5% rate with a 3-2-1 seller-paid rate buydown in place.
This adds up to over $25,000 in savings in the first 3 years!
JVM will refinance you at no cost, taking advantage of JVM Lending’s Rate Drop Free-fi© program. All remaining funds in your “Temporary Rate Buydown Escrow Account” will go toward directly reducing your loan balance – so not a single dollar is left behind.
A Temporary Rate Buydown, as the name implies, only buys down the rate for a temporary period of time. A 3-2-1 Temporary Buydown, for example, buys down your interest rate 3% in year 1, 2% in year 2, and 1% in year 3 – before returning to the permanent market rate (the rate you would have obtained without a buydown) in year 4. A Permanent Rate Buydown, as the name implies, buys down your interest rate permanently for the life of the loan. Permanent Buydowns, however, provide much less interest rate relief, as they typically require a fee equal to a full 1% of the loan amount to reduce the rate by only 1/4%. Our founder wrote a short blog about why he does not like Permanent Rate Buydowns here.
Finally, lenders prohibit buyers from
paying for Temporary Buydowns – so the funds have to come from the sellers or other third parties. Permanent Buydowns, however, can be paid for by either buyers or sellers.
We are committed to reinventing the mortgage lending model in order to provide outstanding service, low rates, and some of the fastest closing times in the industry.
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