Buydowns are back! Iran Cease Fire?

This was a quick Thursday update from early May, and the short version is that rates had been climbing for a couple of weeks and then caught a break.

We sent a couple of lock alerts the week before, because rates were moving up. Then, the morning I recorded this, there was news overnight that it sounded like there would be a ceasefire with Iran. I hope that is true, for a lot of reasons beyond mortgages. For our purposes, oil was down in a pretty big way that day, and that is helpful for bonds, which is what moves mortgage rates. I said I hoped we would stay in that range, because we had been locking people.

The thing I kept hearing about was buydowns. They are back in the conversation because rates are higher. We saw several loan estimates from other lenders that were selling people on a lower rate with a 1-0 buydown, where the lender can pay for it. A 1-0 buydown lowers your rate for the first year, and then it steps up to the note rate. It is a way to ease into a payment. I do not think any single option is right for everyone, but there are some good options for buyers who are on the fence, and it is worth asking about them before you decide to wait.

I also said something I still believe. We had not seen a lot of people pull back yet. Obviously, if rates got higher it would not be a good thing. But there were plenty of people out there taking advantage of the market. If you have been waiting for a perfect moment, remember that nobody really calls the bottom, and a temporary buydown or a seller credit can change your first-year payment right now without you having to guess where rates will go.

The other thing I flagged was a date to watch that month: May 15, when Jerome Powell's term as Fed chair ended and a new chair was set to take over. A new Fed chair is a real variable, and I told people to pay attention to it.

I also said there is a lot of opportunity out there right now in creative financing, and I was still surprised how many experienced agents had not been taught it. If you are an agent, I would love to talk about it. If you are a buyer in Redding or the rest of Shasta County, you do not have to be an agent to ask. I would rather walk you through a buydown or another structure and let you decide than have you sit out because you assumed the numbers did not work.

If you want to see the real payment with and without a buydown, start with conventional financing or get your rate. MortgageOne is now licensed in 49 states.