When you list your property with us, you benefit!

We use effective, proven tools in all aspects of the marketing & sale of your property to attract the largest pool of qualified buyers possible! 

Your goal is our goal - "To net you the most money possible, in the shortest period of time, with the least amount of hassle so you can move onto your next chapter in life!"

The 3-2-1 Mortgage Buydown

  • This is a 30-year fully amortized mortgage.
  • The interest rate increases 1% every year for the first three years.
  • Then the interest rate is fixed for the remaining term.

Here is an example. Say your loan balance is $350,000 and the interest rate is fixed at 6.75% for 30 years. The seller (or you) could "buy down" the interest rate by paying a lump sum of $15,853. This is how it works:

  1. First-year interest rate is 3.75%, payable $1,621 per month.
  2. Second-year interest rate is 4.75%, payable $1,826 per month.
  3. Third-year interest rate is 5.75%, payable $2,043 per month.
  4. Years four through 30, interest rate is 6.75%, payable $2,270 per month.
  • First-year savings (as compared to $2,270 per month) is $649 per month or $7,790.
  • Second-year savings (as compared to $2,270 per month) is $444 per month or $6,332.
  • Third-year savings (as compared to $2,270 per month) is $228 per month or $2,731.

Add up the annual savings: $7,790 + $6,332 + $2,731 = $15,853. Therefore, it costs $15,853 to buy down the interest rate and payments for three full years.

Benefits of 3-2-1 Mortgage Buydown

  • The borrower qualifies for this loan at the 3.75% interest rate and payment amount of $1,670 versus the real rate of 6.75% and the payment of $2,270.
  • Instead of the payment jumping all at once, it goes up in smaller increments, about $200 each year, for the first three years.
  • It keeps payments low for 36 months for borrowers whose income is expected to later increase. Perhaps a spouse is returning to work after a hiatus or a person expects to graduate and land a higher paying job with that newly earned degree.

The 2-1 Buydown Mortgage

  • This is a 30-year fully amortized mortgage.
  • The interest rate increases 1% every year for the first two years.
  • Then the interest rate is fixed for the remaining term.

Here is an example. Say your loan balance is $350,000 and the interest rate is fixed at 6.75% for 30 years. The seller (or you) could "buy down" the interest rate by paying a lump sum of $8,063. This is how it works:

  1. First-year interest rate is 4.75%, payable $1,826 per month.
  2. Second-year interest rate is 5.75%, payable $2,043 per month.
  3. Years three through 30, interest rate is 6.75%, payable $2,270 per month.
  • First-year savings (as compared to $2,270 per month) is $444 per month or $6,332.
  • Second-year savings (as compared to $2,270 per month) is $228 per month or $2,731.

Add up the annual savings: $6,332 + $2,731 = $8,063. Therefore, it costs $8,063 to buy down the interest rate and payments for two full years.

Note: Lenders typically require a 10% down payment for a 3-2-1 Buydown and a 5% down payment for a 2-1 Buydown. There are other types of mortgage of mortgage buydowns, but these two are the most popular. In parts of the country where sales prices are very low, it's not cost prohibitive to do a permanent 1% interest buydown.

Rates are subject to change at any time.  The KariAndJoe.com Team can refer you to a Mortgage Professional who will execute a current scenario based on your situation and pricing.

The KariAndJoe.com Team | Your Home Selling System since 1989