Quaint Oak Mortgage works with our customers to facilitate home loans by providing a variety of products to fit your individual circumstances. For borrowers looking for a flexible lending option, a 2-1 buydown may be the solution for securing your home. Learn more about this program and what it means for those purchasing new property.
A 2-1 temporary buydown allows the borrower to reduce their monthly payments for the first two years of their loan. When utilizing a 2-1 temporary buydown, the mortgage program and note rate, the interest rate used to calculate a monthly payment, remain unchanged. This means if you are utilizing a 30 year fixed rate mortgage your note rate is fixed for the entirety of the 30 year period.
In order to have a reduced payment for the first two years, the seller will contribute towards a “buydown subsidy” at closing as part of their seller credit towards closing costs. This subsidy amount will be held in an escrow account and each month for the first 24 months when the borrower makes the reduced payment, the company servicing the loan and collecting the payments will use funds from the 2-1 temporary buydown to cover the difference.
With just a small investment from the seller, a borrower can save monthly on the cost of their home and potentially use those funds elsewhere. As an example, a homeowner with a 2-1 buydown loan could have access to more cash for furniture and furnishings, appliance upgrades, paint, and other home items to invest further into the home of their dreams. By lowering a new homeowner’s out of pocket expense over the course of the first two years, a new homeowner utilizing a 2-1 buydown loan can access the financial lending option that fits their goals.
At Quaint Oak Mortgage, we strive to deliver you mortgage solutions that match your homebuying objectives. As a team, our goal is to provide personalized service and help you reach your dream of homeownership. Reach out for more information regarding 2-1 buydowns from a trusted Quaint Oak mortgage banker.
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