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Unlocking the Power of Buydown Mortgages: A Game-Changing Strategy for Buyers and Sellers

June 27, 2023 by Kevin Martini

In today’s real estate market, having a well-planned mortgage strategy is crucial for buyers who want to stand out and increase their chances of getting their offer accepted. Logan Martini with the Martini Mortgage Group offers a game-changing mortgage strategy allowing buyers to control the transaction and set the pace. One of their advanced strategies is the buydown mortgage, which offers immediate savings and introduces a new dynamic to property transactions.

A buydown mortgage involves the seller contributing funds to lower the buyer’s mortgage interest rate. This unconventional approach benefits both the buyer and the seller, satisfying the buyer’s desire for a lower cost while allowing the seller to maintain the sales price and maximize profits. It transforms the transaction into a win-win situation for both parties.

There are two types of buydowns: temporary and permanent. A temporary buydown lasts for a specific period, usually, one to three years, during which the seller pays a lump sum to reduce the buyer’s interest rate. On the other hand, a permanent buydown lowers the interest rate for the entire loan term and requires a more significant contribution from the seller.

While requesting a seller to buydown the mortgage rate may initially seem like asking them to make a financial sacrifice, it can actually be an appealing option for sellers. By avoiding a reduction in the sales price, sellers can expedite the sale process, especially in markets where lowering the price may result in a faster sale.

Four Benefit from Permanent Buydown with Seller-Paid Points

As a primer, “Seller-paid points” are where the seller pays points to reduce the interest rate on a mortgage. One point = 1% of the loan amount paid upfront to your mortgage lender at the closing. This buys you a lower interest rate on your mortgage and a lower monthly payment. 

  1. More Purchasing Power — Paying points to reduce your rate can have 2-3 times the impact on your purchasing power vs. reducing the purchase price by that same amount. For illustration:
    • 2 points on a $500,000 mortgage = $10,000. You’d probably need to reduce your purchase price by $20,000 – $30,000 to have the same impact on your monthly payment.
    • 2 points on a $1,000,000 mortgage = $20,000. You’d probably need to reduce your purchase price by $40,000 – $60,000 to have the same impact on your monthly payment
  2. Less Interest Costs Over The Life Of The Loan  — Your total savings over the life of the loan is likely to be significantly more with seller-paid points vs. a reduction in the purchase price. It could end up being 2-3 times the impact, depending on the specifics of your situation.
  3. Easier to Qualify For A Mortgage — Your interest rate and monthly payment would all be lower with seller-paid points vs. a reduction in the purchase price. This means that your debt ratio would also be lower, and it would likely be easier for you to qualify for financing.
  4. BOTH Buyer And The Seller Get A Tax Benefit — Seller-paid points are tax-deductible to the buyer if the buyer itemizes their tax deductions. Meanwhile, sellers can deduct points paid on behalf of the buyer against their capital gain when they sell the property. The seller-paid points are considered a “cost of sale.” Please see IRS Publication 936 for more details.

Here are four ways a seller can benefit from this strategy:

  1. Their House Becomes More Affordable To a Wider Pool Of Buyers — Paying points on behalf of the buyer can have 2-3 times the impact on the buyer’s purchasing power vs. reducing your list price. That’s because most buyers use mortgage financing. In other words, instead of lowering the list price, agree to buy down the buyer’s interest rate. This increases the buyer’s purchasing power and makes your house more affordable to a broader range of buyers who may have otherwise been priced out of the market.
  2. Seller Could Save Money Vs. Lowering Their List Price — A seller would have to reduce your list price by 2-3 times the number of points paid to have the same impact on the buyer’s monthly payment. 
  3. Seller Gain A Competitive Advantage Vs. Other homes Listed For Sale — Seller-paid points could give a seller a competitive advantage in today’s changing market. This could save you the aggravation and financial loss of significantly reducing your list price to compete with other homes that may be listed for a lower price.
  4. BOTH Buyer And The Seller Get A Tax Benefit — For more details, please see IRS Publication 936 or consult with your tax professional.

How A Buyer Can Benefit From A Temporary Buydown

As a primer,

There are 3 types of temporary buydowns (e.g., 1-0, 2-1 and, 3-2-1).  

A “1-0 Buydown” is where you or the seller pay a fee at the closing to reduce the interest rate on your mortgage by 1% in year 1. This results in temporarily lowering your monthly payment and potentially making the home more affordable to a buyer.

A “2-1 Buydown” is where you or 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 to a buyer.

A “3-2-1 Buydown” can sometimes also be used, although a 2-1 Buydown is more common. A 3-2-1 buydown is where you or the seller pay a fee at the closing to reduce the interest rate on your mortgage by 3% in year 1, 2% in year 2, and 1% in year 3.

What Are the Benefits Of A 2-1 Buydown With The Martini Mortgage Group?

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. If 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.

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, if a recession happens, as is being predicted by many economists, mortgage 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. They tend to go up when the economy is doing well, and they tend to go down when the economy is doing poorly. 

How A Seller Can Benefit From A Temporary Buydown?

When a seller offers to pay for a 2-1 buydown it could give the transaction a competitive advantage vs. other homes listed for sale in today’s changing market. That’s because interest rates have more like riding a roller coaster than a merry-go-round in recent years, creating an affordability crisis for many potential buyers. A 2-1 buydown could also save you 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.

martini factor bottom line

Utilizing a mortgage strategy such as buydown mortgage, can be a powerful tool for both buyers and sellers. By understanding and effectively communicating the benefits, buyers can enhance their purchasing power, while sellers can attract more potential buyers and potentially save on costs. Working with a Mortgage Strategist like Logan Martini from the Martini Mortgage Group can provide valuable insights and help buyers and sellers navigate the complexities of the real estate market.

raleigh mortgage broker logan martini

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 | Logan@MartiniMortgageGroup.com | Equal Housing Lender

Filed Under: 1-0 Buydown, 1-0 Seller Paid Buydown, 2-1 Buydown, 2-1 Seller-Paid Buydown, 3-2-1 Buydown, 3-2-1 Seller Paid Buydown, Affordability, Buy a Home, buydown, buydown mortgage, Buydowns, competitive advantage, Logan Martini, Mortgage Broker, Mortgage Rates, mortgage strategy, permanent buydown, Raleigh, Raleigh Mortgage, Raleigh Mortgage Rates, Real Estate, real estate market, temporary buydown Tagged With: buydown mortgage, Buying a Home in Raleigh, Logan Martini, Martini Mortgage Group, mortgage strategy, Mortgage Tips, permanent buydown, qualifying for a mortgage, Raleigh, Raleigh Mortgage Broker, real estate market, temporary buydown

Unlock Your Dream Home with a USDA Home Loan (a.k.a. Rural Development Home Loan) with the Martini Mortgage Group

June 14, 2023 by Kevin Martini

If where you want to call home is beyond city limits, the USDA Rural Development Home Loan program, also known as USDA Home Loan, is a mortgage solution you may want to consider. It could be an ideal mortgage solution for you.

The USDA Home Loan offered by the Martini Mortgage Group makes homeownership more accessible and economical by providing affordable home financing options to eligible borrowers, making the dream of owning a home a reality.

Benefits of Rural Development Home Loans

USDA Home Loan loans provide a multitude of benefits.

Perhaps the most enticing is that they offer 100% financing, which means no down payment is required from the borrower. These loans also have lower interest rates compared to conventional mortgages. Furthermore, USDA Home Loans offer long-term loans for up to 30 years, making repayments affordable for most borrowers. In addition, since all Rural Development Home Loans are government-backed, the risk to a lender is decreased, resulting in more lenient qualifying requirements.

Eligibility and Application

Eligibility for a USDA Home Loan depends on several factors, including income, credit, loan use, and the property’s location. The property must be located in an eligible rural area, as the USDA defines.

The application process for a USDA loan involves a few steps:

  1. Check if the property is in an eligible area.
  2. Ensure you meet the income requirements.
  3. Consult with the Martini Mortgage Group to initiate the application process.

7 FAQ’s about the USDA Home Loan by Mortgage Broker Logan Martini

Q1: What is a USDA Rural Development Home Loan?
A: A USDA Rural Development Home Loan, also known as a USDA Home Loan, is a mortgage solution provided by the United States Department of Agriculture (USDA) designed to promote homeownership in rural areas of the country.

Q2: Who is eligible for a USDA Home Loan?
A: USDA Home Loans are targeted toward low-to-moderate-income families. Eligibility is based on income, credit score, and the location and use of the property. The property must be located in an eligible rural area, and the borrower’s income should generally be at most 115% of the median income for that area.

Q3: What does it mean that the USDA Home Loan offers 100% financing?
A: 100% financing means that you don’t need to make a down payment. The home’s total purchase price can be financed as part of the USDA Home Loan.

Q4: What is the maximum loan term for a USDA Home Loan?
A: The USDA Home Loan offers long-term mortgages, with a maximum term of up to 30 years.

Q5: Are there specific requirements for the property I wish to purchase?
A: Yes, the property must be in an eligible rural area as defined by the USDA. Additionally, it should meet certain safety, sanitary, and decent living conditions stipulated by the USDA.

Q6: Can I refinance an existing mortgage with a USDA Home Loan?
A: Yes, refinancing is possible with a USDA Home Loan. However, certain conditions apply, and it’s best to consult with a lender or mortgage professional to understand your options.

Q7: Does the USDA Home Loan require mortgage insurance?
A: Yes, the USDA Home Loan program requires borrowers to pay an upfront guarantee fee, which can be rolled into the loan amount, and an annual fee, which is paid monthly.

martini factor bottom line
Martini Factor Bottom Line on the USDA Home Loan

The USDA Home Loan (a.k.a. the Rural Development Home Loan) is a tremendous opportunity for individuals and families desiring homeownership in rural areas. Its lenient eligibility criteria, zero down payment, and favorable interest rates make it an excellent alternative to conventional loans. If your dream is to live outside the city limits, then the USDA Home Loan offered by the Martini Mortgage Group could be the key to unlocking your dream home.

Whether you’re a first-time or repeat homebuyer, making an informed decision about your next move is crucial. Regarding homeownership, having certainty about your financing options is the proper first step, regardless of your experience level. This way, you can confidently search for your dream home armed with price and cost clarity.

Let’s connect and discuss the proper mortgage strategy for you and your family. The USDA Home Loan may be the perfect solution, or there may be a better one. Whether you’re ready to leap into homeownership or want to explore your options, I’m here to help you make the best decision for your unique situation.

My name is Logan Martini, and you can reach me by dialing (919) 238-4934. Contact me today for a confidential conversation.

raleigh mortgage broker logan martini

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 | Logan@MartiniMortgageGroup.com | Equal Housing Lender

Filed Under: 100% financing, Affordability, Buy a Home, Down Payment, Home Loan, Home Loan Rates, Home Loans, Homebuying Strategies, Logan Martini, MartiniFactor, Mortgage, PMI, Raleigh, Raleigh Mortgage, Raleigh Mortgage Rates, Real Estate, USDA Home Loan, USDA Rural Development Home Loan, zero down payment Tagged With: 100% financing, Best Mortgage Broker, Buying a Home in North Carolina, Homeownership, Logan Martini, Low-to-moderate income families, Martini Mortgage Group, mortgage, Mortgage Broker, Rural areas, USDA Home Loan, USDA Rural Development Home Loan

The Ultimate Guide to Getting a Raleigh Mortgage | Your Key to a Successful Home Loan Journey | Martini Mortgage Group

April 28, 2023 by Kevin Martini

Are you ready to embark on the ultimate mortgage journey and secure the perfect home loan? Then you’ve come to the right place! Welcome to the Martini Mortgage Group’s ultimate guide to getting a Raleigh mortgage, where we reveal all the secrets to getting the best deal possible.

Here at the Martini Mortgage Group, we’re not just any old mortgage company – we’re the top-rated mortgage company around, and we’re here to help you get the best possible rates and stress-free, on-time closings. We’re all about delivering an honest, well-communicated lending experience that’s based on knowledge and trust.

And that’s why our ultimate guide is the go-to resource for anyone looking to buy a home in Raleigh. With comprehensive, detailed information on the types of loans we offer, current mortgage rates, and tips to secure the best deal, you’ll have everything you need to make a smart, informed decision.

But that’s not all, friend. Our mission goes beyond just helping you buy a house. We’re here to help you create generational wealth through real estate with the proper mortgage strategy. That means we’ll work with you every step of the way to make sure you’re getting the best possible loan option for your unique situation, and give you the advice and guidance you need to make the most of your investment.

So what are you waiting for, friend? Dive into our ultimate guide today and discover the secrets to getting the Raleigh mortgage you deserve!

Types of Raleigh Mortgages Offered by the Martini Mortgage Group

We offer a comprehensive range of loan products to cater to the diverse needs of our clients. These include:

Fixed-Rate Home Loans

Lock in a consistent interest rate for the life of the loan, providing stability and predictability in your monthly payments.

Buydown Home Loans

Benefit from a lower introductory interest rate on your mortgage for the first or a few years.

FHA Home Loans

Take advantage of more lenient qualification requirements, including lower credit scores and minimal down payment options. The FHA Home Loan is NOT just for first-time homebuyers!

VA LHome Loans

Eligible veterans and active-duty service members can access home loans with no down payment, no loan limits, and favorable interest rates.

Rural Development Home Loans (a.k.a. USDA Home Loans)

Rural and suburban homebuyers can benefit from low-interest rates and 100% financing options.

Raleigh Mortgage Rates and Factors Influencing Them

Raleigh mortgage rates can vary depending on several factors, such as:

Credit Score

A higher credit score often translates to lower interest rates, as lenders view you as a lower-risk borrower.

Loan Term

Longer-term loans typically have higher interest rates, whereas shorter-term loans offer lower rates.

Down Payment

A larger down payment can help you secure a lower interest rate, as it reduces the lender’s risk.

Market Conditions

Current economic conditions and market trends can influence not just Raleigh mortgage rates but regional and national ones too.

Tips to Secure the Best Raleigh Mortgage Deal

Follow these expert tips to ensure you get the best possible mortgage deal:

Improve Your Credit Score

A higher credit score can unlock better interest rates and loan terms. Pay off outstanding debts, keep your credit utilization low, and avoid applying for new credit before seeking a mortgage and during the mortgage process.

Save for a Larger Down Payment

The more you can put down upfront, the better your mortgage terms will be.

Consider Loan Types

Evaluate the pros and cons of various loan types to determine which one best aligns with your financial goals and needs.

Lock in Your Rate

When you find a favorable rate, consider locking it in to protect yourself from potential rate increases before or during the loan process. The Martini Mortgage Group has a unique ‘Lock & Shop’ program where you can lock the rate for your home loan before you have a property. Yes, it also has a float-down feature.

Application Process and Requirements

To streamline your mortgage application, follow these steps:

  1. Gather necessary documentation, including income verification, credit reports, and bank statements.
  2. Complete the loan application form and submit it along with your supporting documents.
  3. Await pre-approval, which provides an estimate of the loan amount you qualify for.
  4. Choose a suitable loan product based on your pre-approval, and finalize the terms with your chosen one with the Martini Mortgage Group.
  5. Undergo underwriting, where we verify your information and assess your loan eligibility.
  6. Receive a final approval and proceed to the closing process.
logan martini best raleigh mortgage broker

the moment has come for you to take action

The Martini Mortgage Group’s ultimate guide has provided you with the essential knowledge and tools to navigate the Raleigh mortgage landscape confidently. Now, it’s time for you to seize this golden opportunity and embark on your journey toward homeownership and generational wealth.

Just imagine the moment when you finally step into your dream home, knowing you’ve secured the best mortgage deal with the guidance and expertise of the Martini Mortgage Group. You’ll feel an overwhelming sense of accomplishment and pride, knowing that you’ve made a wise investment in your future and the future of your family.

Don’t let this chance slip through your fingers. The perfect Raleigh mortgage is waiting for you, and the Martini Mortgage Group is here to help you every step of the way. Remember, we’re not just any mortgage company; we’re your dedicated partner, committed to ensuring your home-buying journey is smooth, stress-free, and successful.

So, go ahead and dive headfirst into our ultimate guide. Uncover the secrets to securing the best Raleigh mortgage and transform your dreams into reality. Your future self will thank you, and your legacy will stand the test of time.

Take the first step today. Reach out to Logan Martini, Senior Mortgage Strategist with the Martini Mortgage Group, and let him guide you through the world of Raleigh mortgages. Together, you’ll achieve greatness and create a brighter future for you and your loved ones.

Don’t wait any longer – let’s get started on this incredible journey right now!

raleigh mortgage broker logan martini

Filed Under: Applciation Process, Down Payment, Hoem Loans, Home Loans, Logan Martini, Mortgage, Mortgage Rates, Raleigh Mortgage Tagged With: application process, buydown home loans, Credit Score, down payment, FHA Home Loans, fixed-rate home loans, generational wealth, home loans, loan types, Logan Martini, Martini Mortgage Group, mortgage rates, Mortgage Tips, Raleigh, Raleigh mortgages, real estate investment, USDA home loans, VA home loans

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    Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | For licensing information go to: www.nmlsConsumerAccess.org and/or www.GoldStarFinancial.com Please review our Disclosures & Licensing information | Gold Star Mortgage Financial Group Corporation has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency. Equal Housing Lender. For further information about Gold Star Mortgage Financial Group, Corporation, please visit our website at www.GoldStarFinancial.com. Receipt of application does not represent an approval for financing or interest rate guarantee. Applicant subject to credit, acceptable appraisal, title, and underwriting approval. Not all applicants will be approved. Other terms and conditions apply. Contact Gold Star Mortgage Financial Group, Corporation for more information and up-to-date rates.

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      to Terms of Use | Privacy Policy | TCPA Consent * By submitting you agree to our Privacy Policy, Online Policy, TCPA Disclosure & Consent for SMS/Texting. Msg/data rates may apply. This consent applies even if you are on a corporate, state or national Do Not Call list. By checking this box, you expressly consent that Martini Mortgage Group may call, text and email you about your inquiry. This may involve the use of automated means and prerecorded/artificial voices. This consent is not a condition to purchase any products or services. You are providing express written consent under the Telephone Consumer Protection Act (TCPA) to be contacted by Martini Mortgage Group. You may revoke this consent at any time by replying 'STOP' to any text message you receive or by contacting us at +1(919) 238-4934.

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