As a buyer in the Lethbridge Alberta Canada market, you’ll find there are many different mortgage options available to you. A buydown mortgage is one such option. This option can help you reduce your interest rate either temporarily or permanently. In this article, we’ll go over the two different options you have for a buydown mortgage so you know exactly how a buydown mortgage works. Giving you another option when you are looking at Lethbridge homes for sale.

What is a Buydown Mortgage? Lets find out together.

A buydown mortgage is when you pay an initial lump sum to “buy down” the interest rate on your loan. This allows you to qualify for larger loan amounts based on your income, because your monthly payments will be lower.

Basically, a buydown mortgage is when you pre-pay your interest upfront. There are two types of buydown mortgages: Temporary and permanent.

Lets look at each option a little more closely.

What is a Temporary Buydown Mortgage?

Just as the name implies, a temporary buydown mortgage is when you buydown your mortgage for a specific period of time.
The most common way to do this is the 1-2-3 method. This means the buyer pays 3% less than the usual interest rate the first year, 2% the second, and 3% the third. Of course, the terms are usually negotiable and you can buy down even more if you choose to.

The temporary buydown mortgage is great because it can help you reduce your monthly payments for the first three years of moving into a new home in Lethbridge. This can help offset the costs of moving expenses, furnishings, building costs, etc.

What is a Permanent Buydown Mortgage?

Again, just as the name implies, a permanent buydown mortgage is a buydown mortgage that allows you to pay upfront for the entire loan.

Keep in mind that you’ll still have to pay the interest either way. In this case, you’re just paying it upfront.

In a “buyer’s market,” it’s not uncommon for sellers to try and entice buyers by offering a permanent buydown mortgage. Options for you to buy their mortgage.

You now know what a buydown mortgage is, its benefits and how it works. Knowing your options is a big part of choosing a loan. No matter what you choose, it’s important to speak with a local professional in person. So if you have any mortgage questions, I will me more than glad to answer you queries.

There is a lot of property for sale in Lethbridge and having a real estate professional on your team can help you to navigate the difficult process of buying or selling a home in Lethbridge. Call me at 403.795.7777 or email me at info@lethbridgehomeshop.ca to discuss Lethbridge real estate or Lethbridge land for sale and I will be more than happy to answer all your questions. Or, if you would like instant access to information about buying, selling, or building a home in Lethbridge, including Lethbridge real estate values and more, please visit the most complete website dedicated to everything Lethbridge real estate at http://www.courtneyatkinson.ca or contact us using the form below.

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 Tags: Lethbridge real estate, Lethbridge homes for sale, property for sale in Lethbridge, Lethbridge, Courtney Atkinson

Article's Author

Courtney Atkinson
Atkinson & Associates
Lethbridge, AB

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