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Even Now, Getting a 4.5% Rate Isn't Impossible

Jessica Evans

For Jessica Evans, real estate is more than a job — it’s a way of life...

For Jessica Evans, real estate is more than a job — it’s a way of life...

Mar 1 3 minutes read

Getting a fantastic interest rate is still 

possible with this innovative program.

You may have heard that interest rates are above 6%, which is entirely accurate. The average mortgage interest rate for a 30-year, fixed-rate mortgage is in the mid-sixes. You might be thinking that's way too high. I definitely can't buy a house. Did you know that it's still possible to get an interest rate of 4.5%?

This isn't an option that only exists for people with a huge down payment, perfect credit, or tons of money. This is actually available to a lot of purchasers, and many don't know about it. The most common way buyers are getting interest rates in the mid-fours right now is by using something called a 2-1 buydown. A 2-1 buydown is essentially buying down the interest rate.

"Did you know that it's actually still possible to get an interest rate of 4.5%?"

The best part is that this comes at no out-of-pocket expense. You do not have to bring a lot of cash to your lender and say, “here, I want this interest rate.” The seller can pay for this. Actually, they have to. That's one of the caveats of how it works. With a 3% credit from the seller, your interest rate is bought down by 2% in the first year and 1% in the second year. If interest rates are at 6.5%, that means in year one, you'd be at 4.5%. Then in year two, you'd be at 5.5%. Then if you choose to do nothing at all, the interest rate will go back to where it is at 6.5%, but rates are expected to decrease. Chances are very good that even by the end of year one, you could refinance into a 30-year, fixed-rate mortgage at a rate that's comfortable to you.

Who is this a good option for? This is a good option for buyers who are using conventional mortgages and who can purchase without a seller credit because the amount of the seller's credit is limited to 3%. You can't get both 3% to cover your closing costs and 3% to buy down the rate—it's one or the other. Buyers with at least a 3% down payment and 3% to cover closing costs, or about 6% of the sales price, would be in good shape to consider using this program.

Remember, if you have any questions about this topic or real estate in general, please reach out to me. I would be delighted to serve as a resource for all of your real estate needs.

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