1/9/24 – Lender Paid 1/0 Buy Down

Everyone should be back to work now; it is time for a long Martin Luther King holiday weekend! LOL! Let’s make this a working weekend!

Many buyers are on the fence, waiting for rates to go down further! Since we all believe that rates will go down. One way to get clients off the fence without paying more is to offer up a Lender-paid 1/0 Buydown. This is different from a seller buydown, and I still suggest a 0-point loan since rates will be lower, and they will likely refinance in the next 12-18 months.

Let’s say the FHA rate with 0 points today is 5.99% (6.85APR). On a $750,000.00 Purchase Price, with 3.5% down, the payment for Principal and Interest is $4410.45 + Taxes, Insurance, and PMI = $5679.22

If we do a Lender-paid 1/0 Buydown, the rate will drop to 5.375% in year one and then go to 6.375% in years 2-30, assuming you never refinance. The first year’s payment will be $4123.72 + Taxes, Insurance, and PMI = $5392.49. This may seem like a small saving, but this strategy works if we are off by a few hundred dollars.

Another way to look at it is if your client wants to stay below $5,400 per month, a 30-year fixed will only get to $705,000.00. If we get them the Lender-paid 1/0 buydown, they can get to $750,000.00 with the lower payment.

To get a 30-year fixed rate FHA loan today at 5.375%, a buyer must pay about 2 points.

Condo / Townhome issues we know of now. Properties can be financed with 10% down and are considered NON-WARRANTABLE:

1. Scenic Hills – Insurance
2. Mariposa – Litigation semi-cleared! Insurance a mess!
3. Bouquet Canyon Village – Insurance
4. Madison – Litigation – I heard an FHA loan closed in there! I am trying to find out if it is an underwriter error, or will it be okay to do FHA loans there?
5. Cornerstone – Insurance
6. Canyon Oaks – Insurance
7. Brookside Walk – Insurance – NEW as of last week
8. Shadow Ridge – Oak Park – Insurance
9. Sierra Glen Condos – Insurance
10. American Beauty Condos – The brown ones – Insurance – 50 Mil in coverage for 748 units is not nearly enough!

As of today, the list of condos needing a minimum 25% down payment is considered non-warrantable. Please note – these are likely not financeable if the insurance coverage is too low:

1. Bridgewater, Emeryville - Insurance issues
2. American Beauty Village, Santa Clarita - West has insurance issues – East will get renewed on February 28, 2024, and supposedly will have enough insurance, so that is good news!
3. Cabrini Villas, Burbank - Maybe able to do 10% down, case by case! Please provide a specific address & LTV & occupancy.
4. Morada, San Diego - Insurance issues.
5. Parkwoods, Oakland - Insurance issues.
6. The Summit, San Diego - Insurance issues
7. The Met at Warner Center, Woodland Hills - Due to the project size, we can lend with 10% down on the project side that is on Burbank and Owensmouth. They are no longer lending for the project section on Canoga.
8. West Creek and West Hill Valencia, CA - Insurance

Please let me know if you hear anything new on condos or townhouses.

Interest rates are slightly higher today, but it is flat for the most part! We are awaiting the CPI number that comes out Thursday!

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• We do loans in all states, so call me with anything you need.  
• Government Loans (FHA / VA) are in the high 5’s and low 6’s
• Conventional Loans up to $765,550.00 are in the low to mid 6’s
• High Balance Loans $765,550.00-$ 1,148,325.00 are in the mid to high 6’s
• Jumbo loans above $1,148,325 are in 6’s
• Bank statement loans - They are available with 10% down again! 8’s and 9’s depending on down and credit score.
• No income qualifier – 40% down with reserves! In the 8’s!
• 0 down loans are in the high 7’s – 660 credit score min right now, up to $740,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - typically 7.500% with limited fees – and they get you where you need to go!
• 0 down California Dream for all Equity Share – Postponed until February 2024???
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I am available all week if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. Please text (661-714-6258) or email me at Mike@AugustaFinancial.com.

Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow!