One option some savvy homebuyers are asking about today are "temporary buydowns". Simply put, a temporary buydown allows a buyer to ease themselves into a mortgage by giving them a reduced interest rate and, therefore, reduced payments. The seller puts up the money to make up the difference between the lower buydown interest rate and the market interest rate. The buyer has to qualify at the higher market rate, making it a low risk loan. First-time homebuyers may find a temporary buydown appealing since they, many times, need to furnish the home, buy appliances or invest some money decorating. For example, a 2-1 temporary buydown offered on a 5.50% conventional 30 year fixed rate loan, would mean that payments are made as follows on a $100,000 home with a 10% downpayment:

1st 12 months - the payments are made at 3.50% interest. Principal & interest only would be approximately $404.14.

2nd 12 months - the payments are made at 4.50% interest Principal & interest only would be approximately $456.02

Remaining term - the payments are made at 5.50% interest. Principal & interest only would be approximately $511.01

That is a substantial payment reduction saving you almost $2000 in 2 years! Please contact me with any questions you may have!