1/0 lender paid buydown Many of us feel that interest rates will be lower next year or so. Sure, we've been wrong a few times before, but we're all staying positive and hoping for the best! Recently, we've been talking to our clients about 1/0 lender-paid buydowns - a fantastic loan program for those who believe they'll refinance in the next 12 months or so. Let's break it down! A 1/0 buydown works the same way it always has, but it never hurts to have a refresher. Let's say the current rate for a specific buyer is 6.75% with no points today, and they're considering a $650,000 loan. They're hesitant to buy now because they think rates will drop. Does that sound familiar? No problem! With a 1/0 buydown, they can secure a rate of 6.125% for the first year, with years 2-30 at 7.125%. What's the big advantage? They enjoy the lower rate for the first 12 months, and when rates drop, they're likely to refinance anyway - so there's no downside, assuming rates come down! Here's the beauty of it: the principal and interest payment in Year 1 is $3,949, and from Year 2-30, it's $4,379. If they went with the standard 30-year fixed rate, the payment would be $4,215. The breakeven on this loan is 32 months, so it makes a ton of sense! Lower payments to start, and if the buyer pays it off between 6 and 12 months, they're eligible for a refund of the unused portion of the buydown. Keep in mind that this type of buydown doesn't work on all loans - it's most effective with government and conventional loans. Jumbo and high-balance loans can be stingy with rebates, so getting a buydown on those can be challenging. Also, loans for condos with less than 25% down and borrowers with lower credit scores getting conventional loans can be difficult, too. But when it works, it works! If you're advising clients on the fence about buying in today's market and rate is a factor, this strategy could be the nudge they need. A lower initial payment can ease their monthly budget and provide breathing room while we wait for rates to come down. Let's help our clients make the most of their options and set them up for a smart refi shortly! Remember that this is a buydown paid by the lender! ME! We are not asking the seller for compensation, but we can still do that! There are also options with 2/1 buydowns and 3/2/1 buydowns, but we will leave those for another day. Let’s Work Together As the real estate market heats up this spring, you need to focus on selling more homes - not stressing over loan approvals. With 35 years of experience, knowledge, and creativity, my team and I are here to make your life as a real estate agent easier and help you close more deals. Connect with me today! Please let me know if you have any questions or if a client needs my guidance. I’m just a call, text, or email away. 📞 Cell: 661-714-6258 TEXT: 661-714-6258 📞 Office: 661-260-2970 ext. 2222 📞 Direct Line: 661-291-2222 📧 Email: Mike@AugustaFinancial.com 2025 starts now!!! Please let me know if you would like to go over my latest marketing ideas! But wait, there’s more… Interest Rates Interest rates are bouncing around with Tariff talk and a wobbly economy. We are up one day and down the next. Give me 34 good days in a row, and I will be happy! We offer 12-day escrows for pre-approved buyers - Conventional/FHA/Jumbo/Bridge loans. We provide loans in all states, so call me with anything you need. Government Loans (FHA/VA/USDA) are in the 5’s and 6s. Conventional loans up to $806,500 are in the 6s. High Balance Loans from $806,501 to $1,209,750 are also in the 6’s and low 7’s. Jumbo loans above $1,209,750 are in the 6’s and low 7’s. Bank statement loans are available with 10% down again, with larger down payments in the 7’s. Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement! 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,300,000. Private Money lenders offer Hard Money Loans with 35% down. No Ratio Loans require 30% down. DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down. Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go! 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates! Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits. NAUGHTY CONDOS **Good News for Condos:** Nothing new to report. **Bad News for Condos:** Nothing new, but oh man! The full state of California naughty list will be added to my website this week! Over 700 condos that are naughty per Fannie and Freddie. For all other issues involving condos, please check MikeMeena.com. I will post updates here, but all the information on the naughty list is available on my website. Just go there and click about to find our most updated list. Let me know if you hear anything new about condos or townhouses. I am available every day if you need anything. 📞 Cell: 661-714-6258 TEXT: 661-714-6258 📞 Office: 661-260-2970 ext. 2222 📞 Direct Line: 661-291-2222 📧 Email: Mike@AugustaFinancial.com Have a great day, and an even better tomorrow! Please call me when you have a client who needs to borrow! Mike Meena President | Loan Officer Click to Call or Text: (661) 714-6258 This entry has 0 replies Comments are closed.