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Giving product options to independent brokers
Effective until March 31, the program enables borrowers utilizing the 1-0 buydown to delay a higher payment until 2025 given the launch of the promotion just last week. In addition to the buydown product, no-cost appraisals are another tactic giving independent mortgage brokers a competitive edge as it relates to forging relationships with real estate agents and borrowers, Elezaj said.
Particularly during a period of higher rates, “We want to make sure consumers are aware of different products and things that are available to them,” Elezaj told MPA during a telephone interview. “That’s the benefit of using a broker,” he added. “They’re going to have all these different options to consider.”
The 1-0 Temporary Buydown reduces the buyer’s interest rate by 1% for the first year of their loan. Coupled with the waiving of an appraisal cost – up to $600, Elezaj noted – both offerings combine to lower consumers’ costs.
Cutting through the abstraction
He broke down how the transaction might work in simple terms. “So you want to get a loan and let’s say the rate is at 7.5%,” he said. “So instead of paying 7.5% on a $300,000 loan, let’s say your payments are around $2,100. Instead of paying 7.5%, you’re going to pay 6.5% the first year and your payment will probably be around $1,900. So you’re going to save a few thousand dollars, plus you’re going to get the appraisal for free.”
The benefit may even be longer-term once rates come back down, he suggested. “I think consumers are looking at it like ‘hey, I’ll get a lower rate for the first year and then it’s going to jump back up to 7.5%. But most likely rates are going to start to come down in that timeframe so they are probably going to have to refinance anyway. So it’s just a great way to pay a little less for at least a year.”
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