3-2-1 mortgage buy-down PROS and CONS
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- čas přidán 3. 07. 2024
- Everybody wants to pay a lower mortgage rate, but it comes with a cost. In today’s video, I'm going to define a 3-2-1 mortgage rate buydown and weigh the pros and cons of that kind of option. I touch on the upfront costs when people buy down their mortgage, consumer behavior with adjustable mortgage rates, why it’s important to stick to your home budget when perusing the housing market, and why a fixed-rate mortgage payment might be best for some prospective homebuyers.
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Timestamps:
Intro (0:00)
What’s a 3-2-1 Buydown Mortgage? (0:39)
Positives of a Buydown (2:22)
Cons of a Mortgage Buydown (3:42)
Is a 3-2-1 Buydown a Good Deal? (7:21)
Questions? Get in Touch! (10:07)
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Lenders improved this product and I learned more about it as well. Check out my follow up video as I think this is a great option for many borrowers: czcams.com/video/W-FJ36fgW8M/video.html
Can we be pay more back to principal if we needed to build up equity?
@@allmamalove sure
Great video. Thanks for sharing the pros and cons of 3-2-1! You are very clear, concise, and honest. :)
Glad it was helpful!
Good information! Thank you!
Glad you enjoyed!
Great Video Matt‼️
Thanks Tana!!
Great video!
Thanks brother!
Great explanation! It's nice to see an industry insider actually articulating both the pros & cons of ANYTHING! I run my real estate business the same way...straight talking.
New subscriber here! Thanks for posting. 👍👍
Thanks!!
I’ve been seeing a lot of marketing (as you’ve said) on 3-2-1 lately and it sounded too good to be true. I knew when I heard it that I had to get your take on this. Thanks for being a trusted voice on all things mortgages Matt! So glad I’m subscribed.
Thanks Danny! I’ll always shoot straight!
It seems like it's more and more common as home prices shot up so fast during and after covid and so far the rate hikes haven't caused any "crashes" like some people thought. It seems to be a good "deal" if you have a safe job and can afford the full payments and also take chance that after the 3rd year, rates go down.
Matt great videos. I’m also with Umortgage, just started at the Bally Team branch last month!
Awesome! Hope to meet you soon!
@@MattTheMortgageGuy Absolutely. I'm brand new to the mortgage industry, I'm learning so much every day
@@Nick_Loans Good luck to you! I’m also a lending officer, I was formally a underwriter so I understood complex income and how to structure my transactions. Like you, I switched to a retail Lo in early 2014, rates were up, it was slow and after a few years, I was funding 50mm+ annually and now I’m a millionaire today. Dont give up! Its life changing.
@@Rob_G716 What would you recommend for someone who knows very little about complex income? What can I study? Or does it just come with time?
@@Nick_Loans - get exposer to as many deals as possible. Ask lo’s in office to SHARE their complex file scenarios with you
Matt, great video brother, I’ve seen your vides and they’re class! My only question for you is, on the 2/1 buy-down and 3-2-1 buy-down it’s to my knowledge that the upfront cost stays inside of escrow, when / if you have the opportunity to refinance, the upfront amount goes towards a principal reduction at that point. That’s of course if the rates drop. Thought is, instead of charging points since we’re seeing a lot of that lately, they get a lower payment / rate temporarily and when the market shifts and rates drop. Keep on pushing the videos man. I started my channel not to long ago!
Hey Corbin! Yeah, it does stay in escrow. I made another video recently as I’ve grown to love the 2/1 buydown
With interest rate at 7.5% to 8.5% today
With a 3 2 1 buy down or 2/1 buy down.
If you purchase a $600,000 house today at 7.5 or 8% with a 5% down which is around $30,000. Which give you a loan at $570,000. The value of the house drop to 30% - 40%. Would the bank let you refinance? Obviously the bank can’t refinance your house if the value of the house is less that it appraised for..
My brother bought a house a $700,000 house many years ago with $100,000 down however, when the market crash his house is only worth around $350k-$400k.
The bank wouldn’t let him refinanced - they can’t refinance since is house is worth less then what he’s paying for.
With a 2/1 buydown - and today market - do you think we might be in that position at some point?
Hey Matt would love to hear your take on what happened with sprout mortgage and if you think we will see this happen more and more.
Simply answer - yes.
Yes, we’ll see it more. In markets like this only the best and well run companies will survive
Let's say I do the 2-1 buy down. By year 3 when the rate goes back to normal, can't i just refinance? And possible work out a rate that I had in year 1 or 2?
That's is correct, you can refinance
How about if buyer buys the 3-2-1 buydown? Will that still benefit them financially??
I feel like I'm paying too much for my house comparing some numbers you showed...
I have a balance of 350k and I'm paying 2,800 with 3.2 rate that sounds right ?
maybe you got a 15yr loan instead of 30yr?
if you added hoa and taxes this would line up I think
@@alephNull_ i have a 30yr
actually im paying 2831.59
@@Cuyayaplay thats how much I would be paying for 320k at 6% with 400 HOA...
@@alephNull_ hmmm i have 347k at 3.1% FAH
You can get the seller to pay that down right?
Yep, it’s got to be seller funded. I actually am a fan in this current market. I’ve got another video where I explain the benefits
@@MattTheMortgageGuyyou say you pay up front, but technically doesn’t the buy down get lumped into your mortgage? So effectively you pay it over the life of the loan?
@@dub9raiderno, the amounts are put in a separate escrow account and paid over the period of three years, in the case of a 3-2 - 1
THIS LOANS ARE A SCAM. YOU WILL LOSE EVERYTHING IF YOU TAKE THEM
Hmmm… incorrect. It’s a 30yr fixed with a subsidy for the first years. Explain more
@@MattTheMortgageGuy We went throu this already in 2005, same kind of creative loans. loans start low and end high, Interest rates have to come down .