High Loan-to-Value

• Allow buyers to borrower money if they are unable to make a 20% down payment
• Options available require mortgage insurance

Interest Only

Construction to Perm

• One Stop Shopping from Lot Loan to Permanent Loan
• Removes necessity to refinance a construction loan
• Caps available to protect borrower from rising rates

Rehab/Renovation

• Allows customer to borrower money based off the finished product value
• Borrower can buy an “as is” house and use funds from loan to repair of rehabilitate the home

Buydowns are used for two primary reasons.  The most common use is to reduce the note rate of a loan and make qualification easier for the borrowers.  For long-term owners, points can be used to save money over the duration of the note.

Permanent Buydowns or Discount Points

• Points are paid to Buydown the rate for the duration of the loan

***A “point” is 1% of the loan amount

• If a ¼ point is used to buy down a rate 1/8th of a percent it is usually in the buyers favor
• Depending on point/rate spread - points can take 5 to 10 years to break even
• Negative points also known as a premium credit are available.  Premium credits help buyers reduce or even eliminate closing costs.

Temporary Buydowns
           

• Commonly referred to as a 3-2-1 Buydown or a 2-1 Buydown
• The “3-2-1” refers to the Buydown from current market rate

***Example - current 30 year fixed rate is 6.25% - a 3-2-1 Buydown looks like this:
            1st year rate               3.25%
            2nd year rate              4.25%
            3rd year rate               5.25%
            4th – 30th year rate    6.25%

• Dollar for dollar transaction - does not save the borrower money unless it is paid by the seller
• Excellent tool to help qualify borrower with high ratios     
• Usually only available on fixed rate products