Pennsylvania Mortgage Advisors

You don’t have to wait for mortgage rates to drop! Knock up to 3 POINTS off your interest rate with a Buy Down.

Learn how this Seller Assist can be added to any FHA, VA or conventional loan, and LOWER your monthly payments for the early years of your mortgage loan.

Especially in today’s market, homebuyers want the lowest possible interest rate for their mortgage loan. The best way to assure you’re getting the best mortgage rate is to shop around and compare. As Pennsylvania mortgage brokers, BMC Keystone rate shops for you. We compare offers from the nation’s leading lenders AND we have access to wholesale rates.

In addition to finding the most favorable rates and terms for your mortgage, we’ll make you aware of other ways you can make homebuying more affordable, such as adding Buy Down feature to your loan.

“What is a Buy Down Mortgage Loan?”

A “buy down” is not a mortgage loan, it’s a feature that can be added to a loan. A buy down is a temporary interest rate reduction at the beginning of the loan. The benefit to the borrow is that they’ll have smaller monthly mortgage payments for the first year or two, depending on the terms. A buy down is a great way to get a little breathing room on a new loan, especially when interest rates are elevated.

A Buy Down Must Be Planned

BMC Keystone has access to lenders who are willing to incorporate a Buy Down feature into any FHA or Conventional Mortgage. There are different types of allowable Buy Downs:

  • 3/1 Buy Downs (offsets 3 points on year 1, 2 points on year 2, and 1 point on year 3)
  • 2/1 Buy Downs (offsets 2 points on year 1, 1 point on year 2)
  • 1/1 Buy Downs (offsets 1 point on year 1)

But it’s important to know that you’re interested in a buy down before you start looking at homes or negotiating the selling price because it will affect your offer and the purchase contract with the seller.

How does a Buy Down work?

There’s no magic wand to reduce your rate and shrink your month payment. An interest rate buy down has to be funded, either by the seller or builder, in the form of a credit to you at settlement.

The cost of offsetting the interest rate is calculated and applied as a pre-paid sum, a credit from the seller to the buyer at settlement. The concession funds then go into an escrow account which the lender draws against each month to make up the difference in your mortgage payments.

Refinancing During the Buy Down Period

What happens if you have a 2/1 buy down on your loan, but after 12 months you want to refinance? You'll still get the full benefit of the concession. Each lender has their own method for applying the unused funds and, although the money is not returned to you physically, it will be applied towards your loan when calculating your payoff.

What are the limits of a Buy Down?

Your lender will have rules as to how much of a credit you can receive towards your loan. After all, they need assurance that you will be able to afford the loan after the buy down period is over. The total buy down amount you receive from the seller will have a maximum, depending on your loan type and down payment amount.

Loan Type Money Down Maximum Credit, as % of loan amount
Conventional with > or = 10% down 6%
Conventional <  10% down 3%
FHA n/a 6%
VA n/a 6%

Talk to BMC/Keystone about the most effective way to apply any available seller/builder credits so that you get the maximum allowable benefit.

BMC Keystone will help you compare scenarios

BMC Keystone understands the balancing act for homebuyers between the amount of money you put down on a house, the amount of money needed to cover closing costs, and the ongoing monthly payments. We can help you look at different scenarios so that we can structure a deal that works for you.

Schedule a Free Mortgage Consultation

Don't put your plans on hold. Let's talk privately about  your plans for buying a new home and discuss several ways you can keep home buying affordable. Request a mortgage consultation.