Rising interest rates can make buying a Colorado home seem more difficult, but there are different financing options out there that can provide you some relief. John “JJ” Jeffrey, an experienced mortgage officer at Westerra Credit Union (NMLS201863), recommends the 2-1 Buydown option. A 2-1 Buydown is a type of financing that lowers the interest rate on a mortgage for the first two years before it rises to the regular, permanent rate. That means your interest rates could be up to 2% lower the first mortgage year and up to 1% lower the second mortgage year. Jeffrey states, “The 2-1 Buydown can apply to a 15-year fixed, 30-year fixed, and multitude of other loan programs.”
A 2-1 Buydown can ultimately make transitioning into a new home a lot more palatable and help with redecorating and new furniture expenses that often come with buying a new home. Jeffrey suggests that it also can be used as a seller concession. The seller can make a payment in the form of mortgage points or a lump sum deposited in an escrow account with the lender, and it can then be used to subsidize the borrower's reduced monthly payments. Jeffrey states, “The buyer will still have to make the full downpayment, but through negotiation, the seller can cover the 2-1 Buydown costs.”