A temporary buydown is when a party in a mortgage transaction pays a lump sum in order to reduce the interest rate temporarily for the early years of the loan.
A temporary buydown reduces the buyer’s monthly payments in the first one to three years.
There are numerous options that allow borrowers to lower their interest rate and payment over time.
1-1 Buydown – With a 1-1 buydown, borrowers pay a lower interest rate over the first two years in return for an up-front payment to the lender. The interest rate is reduced by 1% in the first year and second year.
2-1 Buydown – This option allows borrowers to apply closing credits from sellers and builders to pay for two years of interest savings upfront, represented as a 2% savings in the first year and a 1% savings the second year.
3-2-1 – Buydown – Much like the 2-1 buydown, this option allows borrowers to pay for up to three years of interest upfront by using seller or builder closing credits. Here, savings equate to 3% in the first year, 2% the following, and 1% during the final year.
Eligibility
At this time, only Conventional, FHA, and VA loans are eligible for our Temporary Buydown Program.
Other important notes to consider:
- Only primary residences (1-4 unit dwellings) are allowed.
- Available only for fixed-rate purchase transactions or Conventional loan refinances.
- Borrower’s qualification and underwriting approval are based on the undiscounted note rate.
- Manufactured housing is not eligible.
- Can be combined with low down payment programs.
Power to the purchaser.
- No increased loan amount (It is not an ARM).
- Lower out-of-pocket costs amidst rising rates for up to three years.
- Qualifying credit scores as low as 580.
- Freedom to apply closing credits in a more convenient way.
- This is different from buying discount points.
To learn more for a no pressure and stress-free consultation, please contact Jennifer Kaline, Loan Originator | NMLS 2397521 at jennifer.kaline@cardinalfinancial.com or call 410‑258‑0418.
Jennifer Kaline is a local mortgage loan originator who lives in Arnold, Maryland and comes from a long line of mortgage professionals.
Disclaimer:
This is not a loan commitment or guarantee of any kind. Loan approval and rate are dependent upon borrower credit, collateral, financial history, and program availability at the time of origination. Rate and terms are subject to change without notice. Corporate Address: 3701 Arco Corporate Drive, Ste 200,
Charlotte, NC 28273. Cardinal Financial Company, Limited Partnership (NMLS ID 66247, www.nmlsconsumeraccess.org) has the following licenses: AZ Mortgage Banker License #0925883; Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act. Loans made or arranged pursuant to a California Finance Lenders Law license, License No. 603K498; Kansas Licensed Mortgage Company #MC.0025207; Massachusetts Mortgage Lender/Broker License MC66247; NV Mortgage Company License #3968; Licensed by the New Jersey Department of Banking and Insurance #8701663; Licensed Mortgage Banker – NYS Banking Department #B500951; Rhode Island Licensed Lender #20132934LL; and is also approved to lend in: AL, AK, AR, CO, CT, DE, DC, FL, GA, HI, ID, IL, IN, IA, KY, LA, ME, MD, MI, MN MS, MO, MT, NE, NH, NM, NC, ND, OH, OK, OR, PA, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY. Additional licensing information can be found at: https://cardinalfinancial.com/nmls-licensing/.
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