Understanding a 2-1 Buydown

What is a 2-1 Buydown?

If you're in the market for a new home, you may have come across the term "2-1 Buydown." Vertical Builders and their preferred lenders are offering this financing option for select homes and communities. But what exactly does it mean for you as a homebuyer? Let’s break it down.

Understanding a 2-1 Buydown

A 2-1 Buydown is a mortgage financing option in which the builder subsidizes a portion of your monthly payments for the first two years of the loan. This results in a temporarily lower interest rate, making your mortgage payments more affordable during those initial years.

Here’s how it works:

• Year 1: Your interest rate is reduced by 2%, lowering your monthly payment.
• Year 2: The interest rate reduction is 1%, still offering a discount compared to the locked-in rate.
• Year 3 and beyond: The rate adjusts to the original locked-in market rate for the remainder of the loan.

This structure helps ease the financial burden of homeownership during the first two years, providing you with extra savings and flexibility.

How Much Can You Save?

To illustrate the benefits of a 2-1 Buydown, let’s look at two different loan amounts:

The Benefits of a 2-1 Buydown

• Lower Monthly Payments: The reduced interest rate makes homeownership more      affordable in the first two years.
• Financial Flexibility: Use the savings for home improvements, furniture, or other expenses.
• Smooth Transition: Gives homeowners time to adjust to their full mortgage payment.

Is a 2-1 Buydown Right for You?

If you’re looking to ease into homeownership with lower initial payments, a 2-1 Buydown can be a smart option. By taking advantage of this financing strategy, you can enjoy substantial savings and a more manageable mortgage payment during the first two years of your loan.

Interested in learning more? Contact Vertical Builders to explore available homes and see how a 2-1 Buydown can benefit you!

* Figures are for illustrative purposes only.  Savings based on size of mortgage. Interest rate buydown will reduce buyer’s interest rate 2% the first year and 1% the second year. Actual interest rates may vary depending on buyer’s mortgage terms. Must use preferred lenders. Offer in select communities only.