Plaza Home Mortgage, a wholesale and correspondent lender based in San Diego, has joined the growing list of lenders offering temporary buydowns on mortgages.
According to an announcement on its website, Plaza Home is now offering 2-1 and 1-0 seller-paid buydowns on its core Fannie Mae, Freddie Mac, FHA, VA, and USDA fixed-rate mortgage programs.
The 2-1 buydown reduces the mortgage rate by 2 percentage points for the first year of the loan and by 1 percentage point for the second year. The 1-0 buydown reduces the rate by 1 percentage point for the first year of the loan.
According to the Mortgage Bankers Association, as of October mortgage payments were up by $629 through the first 10 months of the year, a 45.5% increase. While mortgage rates fell in November, mortgage rates and costs are still significantly higher than they were at this time last year.
“Using a buydown reduces the borrower's monthly payment for the first one or two years, giving them more affordable payments,” Plaza Home said.
The benefits of the temporary buydown plans include more than just a lower payment in the first or first two years of the loan, Plaza Home notes. Other benefits include:
- No out of pocket cost to the borrower; funds are contributed by the seller, builder or another eligible party.
- If the loan is paid off through refinance or sale before the account is depleted, any remaining funds will be applied to the principal.
- Borrowers know how to plan with pre-determined, predictable payment increases.
For both the 2-1 and 1-0 buydown options, funding may come from the seller, builder, or another eligible interested party. The programs are restricted to purchase transactions, though the loan may be for either a primary residence or, program permitting, a second home.
Founded in 2000, Plaza Home Mortgage is licensed in all 50 states and the District of Columbia and maintains a national footprint with experienced associates serving clients from coast to coast.
Plaza Home is the latest lender to announce buydown options, joining United Wholesale Mortgage, Rocket Mortgage, Guaranteed Rate, and Newrez.
Editors Note: An earlier version of this article mistakenly referred to Planet Home Lending instead of Plaza Home Mortgage. The buydowns are being offered by Plaza Home Mortgage.