Understanding the 1/0 Buydown: A Mortgage Option to Consider

When looking at mortgage options, it’s easy to get lost in the jargon. One term that may come up is the 1/0 Buydown, which is a strategy some lenders use to help borrowers manage the initial years of their mortgage payments.

So, what exactly is a 1/0 Buydown?

This is a mortgage option where the lender reduces the interest rate for the first year of the loan. For example, if the current market interest rate is 7%, the 1/0 Buydown would lower the rate to 6% for the first year. This reduction can provide immediate relief to borrowers, as it lowers the monthly payment for that first year.

After the first year, the interest rate resets to the original agreed-upon rate for the remainder of the loan term. In this case, it would go back to 7% after the first year. While the rate increases after year one, the upfront savings during the first year can make it more affordable to transition into homeownership.

For qualified buyers, I offer the 1/0 Buydown at or better than the current national mortgage rate. Additionally, after the first year, I provide a free refinance that covers closing costs and adjusts the rate to be at or better than the national average. This offer can make it easier to manage mortgage payments in the short term while providing a path to a more favorable rate in the future.

If you’re interested in exploring this option or would like to know if it’s a good fit for your situation, feel free to reach out for more details:

Gabekmg@gmail.com
832-557-1095