A 2-1 buy down mortgage is a type of mortgage in which the interest rate is reduced for the first two years of the loan term. This is done by paying additional points upfront. After the initial two years, the interest rate will adjust to its original rate, which will be higher than the initial rate but lower than market rates at the time.
For homebuyers, this can be an attractive option because it can provide lower monthly payments during those first two years. It can also be a good option for people who expect their income to increase during that time frame, as they'll be able to qualify for a loan with a higher starting interest rate.
Benefits of a 2-1 Buy Down Mortgage
There are several benefits that come with choosing a 2-1 buy down mortgage. As we mentioned, the biggest benefit is that your monthly payments will be lower during those first two years. This can free up some extra cash each month that you can use to pay off other debts or save for other expenses.
Another benefit is that you'll have an opportunity to build equity more quickly. With each mortgage payment, you're not only paying the interest and principal on your loan, but you're also building equity in your home. By making lower monthly payments during those first two years, you'll be able to put more money towards building equity.
Lastly, this type of mortgage can help you qualify for a loan that you might not otherwise qualify for. If you're expecting your income to increase in the near future, opting for a 2-1 buy down mortgage can help you qualify for a loan with a higher starting interest rate.
A 2-1 buy down mortgage can be a good option for homebuyers who want lower monthly payments during those first two years and who expect their income to increase during that time frame. There are several benefits that come with choosing this type of mortgage, but there are also some drawbacks that should be considered before making a decision.
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Jeff Smith - Tiger Home Loans
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Jeff Smith - Tiger Home Loans
📲 480.909.4000
📩 jeff@tigerhomeloans.com
🔗 www.tigerhomeloans.com
Equal Housing Opportunity
Tiger Home Loans NMLS: 2425582 NMLS: 413643