Best Buy-Down Options for December 2022

Recently we broke down the December 2022 lending report. With new information, If you’re considering buying a new home, now may be the perfect time to take the plunge. 

Interest rates will eventually come down, and we are seeing evidence of lower inflation readings. The “buy now, refinance later” strategy can still come in handy. One way to make buying more affordable in the short and long term is to utilize a buy-down option.

Utilizing the 2-1 Buy-Down

The lending industry offers several options to help buyers with their mortgage payments, including the two-one buy down. This program provides relief on mortgage payments for the first two years, making it easier for buyers to afford their monthly payments and potentially saving them thousands of dollars over the life of the loan.

One of the key benefits of the 2-1 buy-down is that it is a fixed-rate loan. This means the interest rate will remain the same for the loan’s duration, providing homeowners stability and predictability. This is especially important in today’s market, where high interest rates are expected to come down soon. By locking in a low rate now, you can save a significant amount of money over the life of the loan.

In addition to the stability and predictability of a fixed-rate loan, the 2-1 buy-down also offers temporary relief on interest payments. The interest differential for the temporary period of relief is subsidized at closing, which can help lower the loan’s overall cost. 

Other Buy-Down Options Available to You

While the 2-1 is the most popular, there are other options to consider. The one-year buy down, for example, generally costs less than 1% of the loan amount, while the two-one is typically around 2.3%. Then there’s the 3, 2, 1 buy-down closer to 4.5%.

You can also utilize the 1-0 buy down, which offers relief in the first year of the loan. These programs may be more or less suitable for you, depending on your situation and personal financial forecast. For example, these options can prove very useful to people expecting an increase in income in the coming year or so. 

Final Thoughts

Overall, a buy-down may be worth considering if you’re looking to buy a new home and want some help with your mortgage payments. 

By taking advantage of these programs, you can get the home you want at a price you can afford while also benefiting from the stability and predictability of a fixed-rate loan. It’s a great way to make your dream of homeownership a reality.