3-2-1 and 2-1 seller buydowns allow homebuyers to have below market interest rates. The seller is essentially prepaying a portion of the buyers mortgage payment to effectively “buy down” the payment for a specific period of time.

With a 2-1 buydown, the interest rate will start off 2 percent lower than the note rate for the first year, then 1 point lower for the next 12 months. The third year and remaining term, the interest rate (and payment) will be the actual note rate.

The 3-2-1 buydown has an interest rate that is 3% lower the first year, 2% lower the second year, 1% lower the third year and the fourth year and remaining term, the buyer pays the note rate.

The cost of the 3-2-1 and 2-1 buydowns is the difference between the note rate payment and the reduced payments.

Typically, these temporary buydowns have only been available for owner occupied properties. I’m pleased to share with you that we have this available for 1-4 unit investment properties too!

A 3-2-1 buydown for a non-owner occupied property can really be a great tool for investors by having a dramatically reduced payment for the first couple years allowing for an improved cash-flow.

Bonus: if the property is refinanced during the buydown period, the homeowner receives the balance of the remaining reserved buydown funds.

If you’re selling a home, offering a buydown can help attract potential buyers.

Please contact me for more information.