10/5/2023 – Buydowns

As we enter the last quarter of the year, look at the buydown loans if your listing is sitting. These are great, as many of us feel that rates will be lower. There are multiple types of buydowns from three years down to one year.

A 1-year buydown (AKA 1/0 Buydown) is a 1% buydown for one year. The cost of this is about 1% of the loan amount, and it would take a 7.50% 30 year fixed rate to 6.50% for the first year and then 7.5% for the remaining 29 years of the loan. So, it is buying the rate down by 1% for one year at a cost of about 1%. Simple and easy.

A 2/1 Buydown would bring the rate down the first year to 5.50%. The second year, the rate goes to 6.50%; in years 3-30, we return to 7.50%. The cost of this one is about 3% of the loan amount!

A 3/2/1 Buydown will bring the rate down the first year to 4.50%; in the second year, the rate goes to 5.50%; in the third year will be 6.50%; and in years 4-30, we will go back to 7.50%. The cost of this one is about 6% of the loan amount!

Please remember that we are talking about the loan amount, not the purchase price.

Tom and Vicki buy a 1.2 million house with $500K down, have a 700K loan amount, and want to do a 2/1 Buydown. Then the cost is $21,000.00, not 3% of the purchase price 36K!

By the way, we qualify the buyer at the 30-year note rate. We are seeing more buyers requesting these to get us through the next couple of years, so if you have a sitting listing, this could help!

Condo / Townhome issues we know of now:

1. American Beauty Village – Insurance
2. Scenic Hills – Insurance
3. Mariposa – Litigation – Agreed upon, but not yet recorded
4. Bouquet Canyon Village – Insurance
5. Scenic Hills – Insurance
6. Madison – Litigation
7. West Creek / West Hills – Insurance
8. Cornerstone – Insurance
9. Canyon Oaks – new this week! LOL!

Please let me know if you hear something new on Condos or Townhouses. We will see premiums increasing, likely increasing the HOA Fees soon!

Today is another fantastic day on the interest rate side. Yes, we are now at the highest levels in over 20 years! Today’s news was about Job openings and labor turnover and those numbers killed the streets estimate with way more job openings than anyone thought! Oh, and this pushed rates even higher! YAY!

• 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 6’s.
• Conventional Loans up to $726,200.00 are in the high low to mid 7’s.
• High Balance Loans $726,201.00-$ 1,089,300.00 are in 7’s
• Jumbo loans above $1,089,300 are in the 7’s
• Bank statement loans - They are available with 10% down again! 7’s and 8’s + depending on down and credit score.
• No income qualifier – 40% down with reserves! In the 6’s!
• 0 down loans are in the mid to 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 - are typically 8.25% with limited fees – But they get you where you need to go!
• 0 down California Dream for all Equity Share – Postponed until October???
• 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 weekend 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 me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!