2/1 Interest Rate Buydown Explained - Baton Rouge, LA

What is this 2/1 interest rate buydown that's been in the mortgage news lately and how does it work? Ryan Larussa with GMFS Mortgage has put together a YouTube video illustrating and explaining how it works and why it can be such a benefit for buyers AND sellers in today's elevated interest rate market!

The brief explanation for this program is as follows:

- Buyer qualifies for a home loan at 7% and wants to offer on a home

- Seller has agreed to a seller concession paying for a 2/1 interest rate buydown

- Buyer is approved for the loan and at closing their interest rate in year 1 of the loan is 5%, 6% in year 2 and becomes 7% in years 3 through the end of the mortgage term

Here is a real life example of how this program works as of 10/1/23:

- purchase price of the house is $399,900

- buyer is using a 95% conventional loan

- loan amount is $379,905 and interest rate is 7.25%

- year 1 monthly payments are $2,097.85

- year 2 monthly payments are $2,339.14

- year 3+ monthly payments are $2,591.62

In year 1 the borrower will save $5,925.24

In year 2 the borrower will save $3.029.76

In total, the borrower will save $8,955.04 over the first 2 years of the loan!

Clearly the buyer benefits financially for the first two years of their mortgage with a reduced monthly payment. The seller benefits because this particular concession has allowed them to sell their home. The buyer further benefits with the ability to re-finance their existing loan in years 1 & 2 to take advantage of the coming lower interest rates. Everybody wins!

GMFS has been a terrific lender partner of mine for years. In particular Ryan Larussa and his team are A+ superstars. Fantastic service, attention to detail, adherence to purchase agreement timelines & they always deliver an approved loan for closing!

Click on this link to read up on the Larussa Team with GMFS Lending. At the link there are phone numbers to contact Ryan and his team as well as a link to begin an online loan application.

If you are unsure if the time is right for you to look for a home mortgage loan or would like to discuss different home mortgage loan options, give Ryan and his team a call - they'd love to speak with you! And after you speak with Ryan - give me a call so we can start looking for you a new home!

Are you interested in buying or selling a home? I'd love to visit with you, no pressure! Call, text or e-mail me.

Interested in searching online for available homes in the Baton Rouge market? Click on this link to go to my website. It will require you to register, but your contact information will come directly to me. You can search freely on my site and contact me when you are ready to speak!