Published October 31, 2022
Buy-Down Interest Rate
Ready for some real talk about getting a mortgage this fall?
As rates inch higher, more homeowners are buying down their interest rates. Curious about what that means and if it’s right for you? Here’s the rundown on mortgage rate buy-downs:
A mortgage buy-down is a way to lower your interest rate by paying discount points at closing. Discount points are a one-time, upfront fee.
Each point costs 1 percent of the mortgage. For example, one point on a $200,000 mortgage would cost $2,000.
Each point lowers the rate by 0.25 percent. So, one point would lower a mortgage rate from 6 percent to 5.75 percent for the life of the loan.
Using this example, roughly, if you bought down your interest rate one point or 0.25% then you would save about $12,600.00 over the course of 30-years with this loan. Each point that is bought down saves you a tremendous amount of money over the course of your loan term.
If you've got some extra savings and can afford it, buying mortgage points may be a smart investment. Also, buyers are asking sellers to provide credits in the transaction to go towards buying down their interest rate, this is something that can absolutely be negotiated.
Some of our local banks and lenders have amazing deals going on right now to help make home-buying more affordable and to help you beat the higher interest rates. We are happy to help walk you through this process and we would love to help advise you in your individual situation. If you have any questions about home-buying and mortgage interest rate buy-down, give us a call at (903)251-3390 today and let us share some of the awesome deals that are going on in our community!
