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Raleigh Mortgage Broker Logan Martini Shares How Raleigh Homebuyers and Raleigh Sellers Benefit From a 2-1 Buydown | Martini Mortgage Group, a Raleigh mortgage lender

October 16, 2022 by Kevin Martini

What is a Buydown?

A buydown (a.k.a. ‘Seller-Paid Buydown‘ or a ‘Temporary Buydown’)  is where the seller pays a fee at the closing to reduce the interest rate on the homebuyer’s mortgage temporarily. This results in temporarily lowering the buyer’s monthly payment and making the home more affordable for a homebuyer today.

What is a 2-1 Buydown?

A 2-1 Buydown is when a seller pays a fee at closing (the fee must be within the Interested Parties Contribution based on the loan the homebuyer is securing) reducing the interest rate on the buyer’s mortgage by 2% in year 1 and 1% in year 2.

How does a Temporary Buydown work?

At the time of closing, the seller will fund a custodial escrow account on behalf of the new homeowner. The borrower will have a reduced monthly payment, and the difference in interest rates comes out of the custodial escrow account.

If at the time of sale or refinance, there is a remaining balance in the custodial escrow account, the unused balance will be credited to the borrower.

Advantages of a Buydown for a Raleigh Homebuyer

A buydown reduces the buyer’s mortgage interest rate and monthly payment during the first few year(s) of homeownership, making the home more affordable for homebuyers. Buydowns have a much greater impact on the homebuyer’s monthly payment than reducing the list price of the home.

Advantages of a Buydown for a Raleigh Home Seller

A buydown could be a great negotiating tool because a greater percentage of homes listed for sale in today’s market are seeing price reductions. Not only does a buydown make a home more affordable to a wider range of buyers who may have otherwise been priced out of the market, it also tends to cost less than a price reduction.

A seller offering to pay for a buydown could provide a competitive advantage vs. other homes listed for sale in today’s changing market. This is because rising Raleigh interest rates could create significantly an affordability challenge for many potential buyers. 

As an added benefit, a buydown could also save a seller the aggravation and financial loss of having to significantly reduce your list price in order to compete with other homes that may be listed for a lower price.

In today’s market both seller and buyers need to evaluate the best approach.

Logan Martini | Raleigh Mortgage Broker & Certified Mortgage Advisor
real estate podcast on seller paid buydowns by raleigh mortgage lender kevin martini

A 2-1 Buydown Scenario

For illustration ONLY: if a homebuyer purchased $400,000 home and put 20% down with a 30-year fixed rate of 7%, they would have a P&I payment of $2,129. However, if the homebuyer requested (or the seller offered) at the list price (e.g. $400,000) the Martini Mortgage Group 2-1 Buydown Program, the rate would be reduced by 2% for the first year (i.e. 5% in this example for illustration ONLY). The rate would be reduced by 1% for the second year. The homebuyer would save $4,932 of P&I during the first year and that is a savings of $411 a month to the homebuyer. In the second year, the homebuyer would save $2,520 a year and that is a savings of $210 a month to the homebuyer.

Is a 2-1 Buydown The ONLY Buydown Option?

No, the Martini Mortgage Group, a Raleigh mortgage lender, Buydown Program has three options (i.e. 1-0 Buydown, 2-1 Buydown & 3-2-1 Buydown). Let’s connect so you can get trusted advice from a local expert that some call the best mortgage guys in Raleigh, NC. The Martini Mortgage Group offers local home loan programs such as Conventional Loans, FHA Loans, Jumbo Loans, and USDA Loans to name a few.

To contact loan officer Logan Martini for a financial review simply call (919)238-4934 or stop by the office since the Martini Mortgage Group is local and is located in downtown Raleigh, NC at 507 N Blount St, Raleigh, NC 27604.

Filed Under: 2-1 Buydown, 2-1 Seller-Paid Buydown, Affordability, Agency Loan, buydown, Buydowns, Conforming Loan, Conventional Loan, Fannie Mae, FHA Home Loan, Freddie Mac, Home Loans, Logan Martini, Mortgage, Mortgage Rates, Raleigh, Real Estate, Refinance, VA Home Loan Tagged With: 2-1 Buydown, 2-1 Seller-Paid Buydown, Buydown, Buydowns, Buying a Home in North Carolina, Buying a Home in Raleigh, Logan Martini, Mortgage Tips, North Carolina, Raleigh, Raleigh Mortgage Broker, Raleigh Mortgage Lender, Real Estate, Seller-Paid Buydown

How Buyers and Sellers benefit from buydowns in Raleigh

October 2, 2022 by Kevin Martini

A unique way that more sellers can meet more homebuyers and more homebuyers can become homeowners is with Seller-Paid Buydowns.

Kevin Martini, Certified Mortgage Advisor with Martini Mortgage Group

WHAT IS A ‘SELLER-PAID BUYDOWN’?

A ‘Seller-Paid Buydown’ is where where the seller pays a fee at the closing to reduce the interest rate on the buyer’s mortgage temporarily. This results in temporarily lowering the buyer’s monthly payment and making the home more affordable for a homebuyer today.

WHAT TYPE OF ‘SELLER-PAID BUYDOWN’ ARE AVAILABLE TODAY WITH THE MARTINI MORTGAGE GROUP?

There are three ‘Seller-Paid Buydown’ strategies offered by the Martini Mortgage Group:

1-0 Buydown…seller pays a fee at closing (the fee must be within the Interested Parties Contribution based on the loan the homebuyer is securing) to reduce the interest rate on the homebuyer’s mortgage by 1% in year 1.

2-1 Buydown…seller pays a fee at closing (the fee must be within the Interested Parties Contribution based on the loan the homebuyer is securing) reduce the interest rate on the buyer’s mortgage by 2% in year 1 and 1% in year 2.

3-2-1 Buydown…seller pays a fee at closing (the fee must be within the Interested Parties Contribution based on the loan the homebuyer is securing) reduce the interest rate on the buyer’s mortgage by 3% in year 1, 2% in year 2 and 1% in year 3.

BENEFIT OF BUYDOWN FOR A HOMEBUYER?

A buydown reduces the buyer’s interest rate and monthly payment during the first few year(s) of homeownership, making the home more affordable for homebuyers. It has a much greater impact on the homebuyer’s monthly payment than reducing the list price of the home.

BENEFIT OF BUYDOWN FOR A HOME SELLER?

A buydown could be a great negotiating tool because a greater percentage of homes listed for sale in today’s market are seeing price reductions. Not only does a buydown makes a home more affordable to a wider range of buyers who may have otherwise been priced out of the market, it also tends to cost less than a price reduction.

A seller offering to pay for a buydown could give provide a competitive advantage vs. other homes listed for sale in today’s changing market. This is because interest rates have gone up significantly this year, creating an affordability crisis for many potential buyers. As an added benefit, a buydown could also save a seller the aggravation and financial loss of having to significantly reduce your list price in order to compete with other homes that may be listed for a lower price.

In today’s market both seller and buyers need to evaluate the best approach. The best approach for a homebuyer may be with a buydown versus a price reduction and for a seller, the best approach may be to offer a buydown instead of a price reduction.

Logan Martini, Senior Mortgage Strategist with Martini Mortgage Group

The following examples of Seller-Paid 1-1 Buydown, Seller-Paid 2-1 Buydown, 3-2-1 Seller-Paid Buydown are for illustration ONLY…assuming a sales price of $400,000 with a Borrower putting 20% down and securing a 30-year fixed mortgage with a rate of 7%. Comparing the sales price to a $25,000 price reduction to a Seller-Paid Buydown.

1-0 Buydown a.k.a. ‘Seller-Paid 1-0 Buydown’

1 1 buydown by raleigh mortgage lender kevin martini with martini mortgage group 507 n blount st raeligh nc 27604 1
seller paid 2 1 buydown a.k.a. 2 1 buydown

2-1 Buydown a.k.a. ‘Seller-Paid 2-1 Buydown’

2 1 buydown by raleigh mortgage lender kevin martini with martini mortgage group 507 n blount st raeligh nc 27604
seller paid 3 2 1 buydown a.k.a. 3 2 1 buydown

3-2-1 Buydown a.k.a. ‘Seller-Paid 3-2-1 Buydown’

3 2 1 buydown by raleigh mortgage lender kevin martini with martini mortgage group 507 n blount st raeligh nc 27604
real estate podcast on seller paid buydowns by raleigh mortgage lender kevin martini
Is a Seller-Paid Buydown the proper strategy for you?

I don’t know however I do know that there is never a substitute for researching your options with a Martini at the Martini Mortgage Group. For a FREE and confidential conversation, simply dial (919) 238-4934.

logan martini raleigh mortgage lender with martini mortgage group 2

Logan Martini

NMLS 1591485 | Senior Mortgage Strategist 

Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604

[email protected]

Kevin Martini

NMLS 143962 | Certified Mortgage Advisor

Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604

[email protected]

kevin martini best raleigh mortgage broker

Filed Under: 1-1 Buydown, 1-1 Seller-Paid Buydown, 2-1 Buydown, 2-1 Seller-Paid Buydown, 3-2-1 Buydown, 3-2-1 Seller Paid Buydown, Agency Loan, Buy a Home, buydown, Buydowns, Conforming Loan, Fannie Mae, FHA Home Loan, Freddie Mac, Home Loans, Kevin Martini, Logan Martini, Mortgage, Mortgage Rates, Raleigh, Real Estate, Things to Consider when Buying a Home, Uncategorized, VA Home Loan Tagged With: 1-1 Buydown, 1-1 Seller-Paid Buydown, 2-1 Buydown, 2-1 Seller-Paid Buydown, 3-2-1 Buydown, 3-2-1 Seller Paid Buydown, Buydowns, Buying a Home in North Carolina, Buying a Home in Raleigh, Gold Star Mortgage, Goldstar Mortgage, Kevin Martini, Logan Martini, Martini Mortgage Group, Mortgage Tips, Raleigh Mortgage Broker, Raleigh Mortgage Company, Raleigh Mortgage Lender, Raleigh Mortgage Rates, Seller-Paid Buydowns

How a Homebuyer can Benefit from a 2-1 Buydown by Logan Martini

September 18, 2022 by Kevin Martini

Just because bidding wars are declining and mortgage rates are jumping higher, it is still competitive out there for homebuyer and home sellers. This unique Raleigh real estate landscape is prompting many homebuyers to re-evaluate their homebuying scenarios.  Technically we are in a seller’s real estate market however there are many unique benefits to a homebuyer in this current market, a Martini Mortgage Group 2-1 Buydown is one of them.

What is a 2-1 Buydown

A “2-1 Buydown” is where the seller pay a fee at the closing to reduce the interest rate on your mortgage by 2% in year 1 and 1% in year 2. This results in temporarily lowering your monthly payment and potentially making the home more affordable for you.

Buyer’s Real Estate Market vs. Seller’s Real Estate Market

buyer's market vs. seller's market by raleigh mortgage broker logan martini

A buyer’s real estate market is generally anything more than 6 months and a seller’s real estate market is generally anything less than 6-months.

Housing inventory measures how many months it would take to sell all the houses currently listed for sale, at the current pace of home sales. For example, if there are 3,000 homes currently listed for sale, and an average of 1,000 homes are selling each month, there would be a 3-month housing supply. This is because it would take 3-months to sell all the homes currently listed for sale.

Raleigh Mortgage Broker Logan Martini

Will it become a Buyer’s Real Estate Market Anytime Soon?

Not likely for many reasons. One of the main reason it is not likely that it will become a buyer’s real estate market anytime soon is the lack of inventory and abundance of homebuyer demand. In fact, it may take not just years, it could take a decade for the housing supply to increase enough to meet demand. Sure, inventory has increased recently and this increase has created a unique opportunity for sellers and buyers.

If you’re a seller, you may have to be more competitive with the way you price your home and potentially offer some concessions like paying for the buyer’s closing costs or offering a 2-1 buyydown. If you’re a buyer, you have more inventory to choose from, but don’t expect prices to tumble anytime soon and you have to still be able to act fast.

What are the Benefits of a 2-1 Buydown?

A 2-1 Buydown reduces your interest rate and monthly payment during the first few years of homeownership, making the home more affordable for you. It can also allow you to benefit from owning a home now so you can start to build equity vs. waiting a few more years and continuing to rent. When the seller pays for the 2-1 Buydown, it would have a much greater impact on your monthly payment than asking the seller to reduce the list price of the home. This could be a great negotiating tool because a greater percentage of homes listed for sale in today’s market are seeing price reductions.

best raleigh mortgage broker logan martini 2 1 buydown

What happens when the Interest Rate goes back to Normal?

In year 3 of a 2-1 Buydown, your interest rate would adjust to its normal “note rate.” If market interest rates are the same or higher than they are today, you would just keep the loan and pay the normal payment. However it is being predicted by many economists, market rates may come down again. In that case, you may be able to refinance at the then-current rates. Keep in mind that interest rates are cyclical.

Connect with Logan Martini with the Martini

Let me know if you’d like for me to run some numbers and see if a 2-1 Buydown might make sense in your situation!

logan martini raleigh mortgage lender with martini mortgage group 2

Logan Martini

NMLS 1591485

Senior Mortgage Strategist | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | [email protected] | Equal Housing Lender

Filed Under: 2-1 Buydown, buydown, Fannie Mae, Freddie Mac, Home Loan Rates, Home Loans, Mortgage, Raleigh, Uncategorized Tagged With: 2/1 Buydown, Buying a Home in North Carolina, Logan Martini, North Carolina, Raleigh, Raleigh Mortgage Lender

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