New Mortgage Incentive: Lender-Paid Temporary Rate Buydown
We are pleased to announce that we are now offering a one-year lender-paid temporary interest rate buydown on behalf of Bluefire Mortgage for qualified borrowers on select loan programs.
A temporary buydown reduces a borrower’s effective monthly mortgage payment for a specific period of time without permanently changing the interest rate on the loan. With a one-year lender-paid buydown, we cover the cost of the temporary payment reduction for the first year.
Here’s what that means for you:
- We, Bluefire Mortgage, pay for it. Not the seller. Not the agent. Not the buyer.
- The payment drops for the first year. That means a lower monthly payment during year one with no prepayment penalty.
- No concessions required. You can submit a strong offer, not requiring any additional asks from the transacting parties.
After the first year, the rate returns to the original note rate for the remainder of the loan. No surprises. No balloon. Just a softer landing in the first twelve months of ownership.
For buyers, it’s real savings at the moment they need it most. For realtors, it’s one less challenging obstacle and one more tool to make a purchase offer stand out.
Here’s an example of how the lender-paid buydown works for a loan amount of $800,000:
| 1-0 Temporary Buydown | Monthly Payment |
| Year 1: 6.50% | $5,056.54 |
| Year 2-30: 7.50% | $5,593.72 |
*7.5% is used for educational purposes only. This is not a rate quote.
That is over $500 less per month in mortgage payments for the first year of the loan.
Why consider a temporary buydown?
Buying a home comes with significant upfront expenses. Between down payment, closing costs, moving expenses, and any needed renovations, repairs, and furniture, the first year can be financially demanding. The temporary buydown helps alleviate some of that stress by giving you a lower monthly payment when you may need it most. In the example above, you would have an additional $6,444 to use towards other home expenses in the first year.
Another reason you may consider a temporary buydown is that you have a promotion or increase in pay you are expecting. This can help bridge the gap until that happens. Do note, you have to qualify for the mortgage at the full note rate.
Alternatively, you may think that interest rates are going to come down in the near future, and you could refinance to the lower rate. The temporary buydown gives you some runway to make lower payments until that time comes. While there is no guarantee that rates will decline or that refinancing will make sense, the temporary buydown gives you the flexibility to evaluate your options down the road. It is another tool available to you.
Perhaps you find you don’t need the additional savings each month. You could still make the full note rate monthly payment during the buy-down period. The difference between the reduced payment and the original payment could be applied toward your principal balance, helping you build equity faster and reduce the total interest paid over the life of the loan.
In other words, the temporary buydown can give you flexibility and options during the first year. If you have questions about a Temporary Buydown and whether or not it is right for you, give us a call at (760) 930-0569! One of our Loan Originators would be happy to help!
