What Does it Mean to Buy Down a Mortgage on a Downtown Minneapolis Condo?
As a buyer in the Downtown Minneapolis Condo market, you’ll find there are many different mortgage options available to you. A buydown mortgage is one such option. This option can help you reduce your interest rate either temporarily or permanently. In this article, we’ll go over the two different options you have for a buydown mortgage so you know exactly how a buydown mortgage works.
What is a Buydown Mortgage?
A buydown mortgage is when you pay an initial lump sum to “buy down” the interest rate on your loan. This allows you to qualify for larger loan amounts based on your income, because your monthly payments will be lower.
Basically, a buydown mortgage is when you pre-pay your interest upfront. There are two types of buydown mortgages: Temporary and permanent.
What is a Temporary Buydown Mortgage?
Just as the name implies, a temporary buydown mortgage is when you buydown your Downtown Minneapolis Condo mortgage for a specific period of time.
The most common way to do this is the 1-2-3 method. This means the buyer pays 3% less than the usual interest rate the first year, 2% the second, and 3% the third. Of course, the terms are usually negotiable and you can buy down even more if you choose to.
The temporary buydown mortgage is great because it can help you reduce your monthly payments for the first three years of moving into a new Downtown Minneapolis Condo. This can help offset the costs of moving expenses, furnishings, building costs, etc.
What is a Permanent Buydown Mortgage?
Again, just as the name implies, a permanent buydown mortgage is a buydown mortgage that allows you to pay upfront for the entire loan.
Keep in mind that you’ll still have to pay the interest either way. In this case, you’re just paying it upfront.
In a “buyer’s market,” it’s not uncommon for sellers to try and entice buyers by offering a permanent buydown mortgage.
You now know what a buydown mortgage is, its benefits and how it works. Knowing your options is a big part of choosing a loan. No matter what you choose, it’s important to speak with a local professional in person. So if you have any mortgage questions, I will me more than glad to answer you queries.
There is a lot of free information available to you about buying, selling or investing in Downtown Minneapolis Condos or Minneapolis Lofts. For complete information about the Downtown Minneapolis condo market including current condos lofts for sale, values, and more please visit the most complete website online www.LivingInDowntownMinneapolis.com dedicated to everything Downtown Minneapolis Condos. Contact Mike Weiland & Elke Stephan of The Weiland Group of Keller Williams with any of your real estate or mortgage related questions by filling out the form below.
P.S. Free weekly list of Downtown Minneapolis Condos including private listings and foreclosures in the most popular locations call the 24 Hour Recorded Information Hotline Now for details...1-888-391-9039 Ext. 126 or visit www.LivingInDowntownMinneapolis.com.
