Buyer Guides
Rate Buydowns in Charlotte NC
A rate buydown reduces your mortgage interest rate for the first 1-3 years of the loan. In the current rate environment, buydowns are one of the most valuable tools available to Charlotte homebuyers.
Common Questions
What is a rate buydown?
A rate buydown is a prepaid interest reduction that lowers your mortgage rate temporarily. A 2-1 buydown reduces your rate by 2% in year one and 1% in year two before returning to the full rate in year three.
How much does a rate buydown save?
On a $400,000 mortgage at 6.5%, a 2-1 buydown drops your payment from $2,528 to approximately $2,023 in year one and $2,271 in year two. That is $5,000-$6,000 in savings over the first two years.
Who pays for the rate buydown?
In new construction, the builder typically pays as an incentive. In resale purchases, the seller can pay as a concession, or the buyer can pay from their own funds. It is negotiable.
Is a buydown better than a lower price?
It depends on your cash flow needs. A buydown helps more if monthly payment is your constraint. A lower price helps more if you are focused on long-term equity and total cost. Both are valid negotiation tools.
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