Newfi Lending has launched of a 2-1 buydown program that’s designed to help consumers, realtors, and brokers. The product is designed to meet the needs of home sellers and buyers in this rising interest rate market.
As the home purchase market moves from a seller's to a buyer's market across the U.S., realtors and builders are looking to offer fresh incentives to attract committed buyers. Newfi can now use seller concessions to help secure reduced mortgage payments for the buyer over the first two years of their home loan.
The 2-1 buydown program is simple: At closing, the seller contributes an upfront fee, which will "buy" the rate "down" for the first two years of the loan. Newfi then places this upfront fee into an escrow account, where disbursements are made to make up the difference in monthly payments. The program will allow 2-1 buydowns where your payment is calculated at a rate reduction of 2% for the first year and 1% for the second year of the loan. This knocks down the new homeowner's initial out-of-pocket mortgage payment, helping them to build equity as they ease into their new home.
Here's an example: On a $250,000 loan with a rate of 5%, the monthly payment would be $1,342. After a temporary 2-1 buydown of $5,232, here's what the reduction in monthly payments would look like for the first two years.
| Year | Rate | Monthly |
| 1 | 3% | $1,054 |
| 2 | 4% | $1,194 |
| 3 | 5%
(back to original rate) |
$1,342 |
*Sample rate provided for illustration purposes only and is not intended to provide mortgage or other financial advice specific to the circumstances of any individual and should not be relied upon in that regard.