Mortgage Update

Economists have a positive outlook of rate trends for Q2 and Q3 of 2023. There is a sense that the worst is behind us and that more normalized rates should be on the horizon. While these rates more than likely will not meet the rate environment of 2021, they should still show relief from the rates in Q2 and Q3 of this year.

Buydowns

A buydown is a method of obtaining a lower interest rate by purchasing discount points at closing. Discount points are a one-time fee that is paid in advance to decrease the interest rate, resulting in a lower monthly mortgage rate.

2-1 Buydowns

Many lenders these days offer a temporary (2-1) buydown, which reduces the initial mortgage payments for the first two years, giving the borrower a temporary lower interest rate. However, the mortgage rate will revert to the original rate after the two-year period. Some lenders are even offering a three-, four- or five-year option.