Aug 15, 2023
Owning a home is a dream for many, but amidst the excitement of house hunting, there's a financial factor that often takes center stage: the interest rate.
The ability to get a lower interest rate can make a massive impact on your monthly payments and overall budget. It can mean the difference between affording a move-in ready home versus one that needs repairs. It could mean being able to afford a larger or more luxurious property.
At McKee Homes, we understand how important it is to get a good rate on your mortgage. That's why we offer our customers the option to work with one of our preferred lenders for special rate buydowns and reduced closing costs.
But what exactly is a buydown, and how can it benefit you? Let's take a closer look.
Mortgage buydowns are essentially a method where the buyer pays an upfront fee to get a lower interest rate on their mortgage. This means lower monthly payments for the length of the loan.
There are two primary types of buydowns:
Temporary buydowns offer a reduced mortgage rate for the initial years of the loan. For instance, with a 2-1 buydown, your interest rate might be reduced by 2% in the first year and 1% in the second year.
After this period, the rate reverts to the original agreed-upon rate.
With permanent buydowns, you pay points at closing to reduce your interest rate for the entire life of the loan.
For example, on a $500,000 loan, paying two discount points might lower your rate from 6.5% to 5.75%.
How does that translate? One point is usually 1% of the loan. So for two points on a $500,000 loan:
Using a simple mortgage calculation for a 30-year fixed loan:
The monthly savings would look like this:
So by paying $10,000 upfront for the two discount points, you could potentially save $244.60 on your monthly mortgage payment. Over the span of a 30-year mortgage, this could translate to a total savings of $88,056!
Both temporary and permanent buydowns are enticing options for people looking to purchase a home. But which type of buydown is right for you?
The answer depends on your individual circumstances:
The McKee Team is here to assist you in finding the best rate possible, depending on the factors that are most important to you:
We believe in making your dream of home ownership more accessible, and our preferred lenders can help you make an informed decision about your mortgage.
The other big advantage is that with McKee Homes, you get all the benefits of a newly built home:
Whether you're eyeing a cozy corner in Fayetteville or a beachside retreat in Wilmington, understanding your financing options is crucial. By opting to get a lower interest rate through buydowns, you not only enjoy the benefits of a new home but also ensure that it remains a financially sound decision in the long run.
For more details about McKee Homes' preferred lender program and rate buydowns, contact our team today!