What You Need to Know About Seller Buydowns

Rising interest rates have had a huge impact on buyer’s affordability – the mortgage on the same priced home might cost a buyer $1,000 more per month than this time last year. 

If you are a buyer or seller in today’s market, you need to know about Seller Buydowns. 

What is a Seller Buydown?

The seller credits the buyer a lump sum that decreases “buys down” the buyer’s interest rate. There are different types of buydowns, but the most common are 1-0 Temporary Buydown and 2-1 Temporary Buydown. 

• 1-0 Temporary Buydown: Reduces the buyers interest rate for 1 year. After 1 year, the buyer pays the fixed rate. 

• 2-1 Temporary Buydown: The buyer pays 2% less than the fixed rate for year 1, and 1% less than the fixed rate for year 2. After the 2nd year, the buyer pays the fixed rate.

How Temporary Buydowns Work 

It’s important to note that the buyer can’t pay for the buydown themselves

Here’s an example of the potential savings. The data is from a local lender, Guild Mortgage. 

Seller Buydowns Help Everyone 

• Sellers get their purchase price
• Buyers get a significant discount on their monthly mortgage payment

If you have any questions about Seller Buydowns, or the real estate market in general, please don’t hesitate to reach out.

Whether you’re buying or selling in Granite Bay or Loomis, I’ll make sure you have a competitive edge.