Lower the rate in 3, 2, 1

At United Heritage, we are helping combat inflation by making home-buying more affordable with our Temporary Rate Buydown program.
What is a Rate Buydown?

What is a Rate Buydown?

A temporary interest rate buydown involves having a lower interest rate at the beginning of your mortgage. For example, although your permanent interest rate might be 6.25%, for the first year your interest rate could be 3.25%, the second year 4.25%, and the third year 5.25% before adjusting back to 6.25% for the remainder of the loan.

When you take advantage of a temporary interest rate buydown, your initial interest rate is lower than the full interest rate reflected in your loan note.

Benefits

  • Save on interest: Use a seller credit to fund the buydown account. During the buydown period, you are not responsible for the extra interest. It’s being paid from the buydown account and does not continue to accrue.
  • Lower Initial Monthly Payments: Your payment will be lower during the buydown period. You can use this money to make investments in your home after moving in, purchase furniture, lawn equipment, etc.

What options are available?

1-0 Buydown

With this option, your rate is 1% lower for the first year of the loan. Once that year is up, the rate adjusts back up to your permanent rate.  You can get a 1-0 buydown at no additional cost to you by utilizing a seller's credit to fund the buydown account. This is a great savings advantage for the buyer and our most popular option.

3-2-1 Buydown

With this option, your interest rate is lowered by 3% during the first year, then in the second year the rate is 2% lower, then in the third year it is 1% lower than the long-term rate.  Once the third year is up, the rate adjusts back to your permanent rate.   As with the 2-1 buydown, you will generally secure additional buydown funds through negotiation with the property seller or your real estate agent; however, you can also use your own funds on deposit.

2-1 Buydown

Your interest rate is lowered by 2% in the first year, then in the second year, the rate is 1% lower than the long-term rate.  Once the second year is up, the rate adjusts back to your permanent rate.  With this option, you will generally secure the additional buydown funds through negotiation with the property seller or your real estate agent.

What Are The Benefits of a Rate Buydown?
Lower Initial Monthly Payments

Your payment will be lower during the buydown period. You can use this money to make investments in your home after moving in, purchase furniture, lawn equipment, etc.

Up to 3% First Year Savings

Choose the funding option that fits your needs the best with the ability to lower your rate up to 3% for the first year. This program is available on all fixed-rate conventional purchase loans for primary residences.

Save on Interest

Use a seller credit to fund the buydown account. During the buydown period, you are not responsible for the extra interest. It’s being paid from the buydown account and does not continue to accrue.


How Can I Fund The Temporary Rate Buydown?

  1. Your negotitated seller credit can be used to fund the temporary rate buydown.
  2. A gift from a family member can be used to fund the temporary rate buydown.
  3. You can fund the temporary rate reduction at closing.

We're here for all homebuyers.

Considering a rate buydown? You've come to the right place. We will walk you through the entire process from pre-qualification to signing on the dotted line. 

Not ready to apply? Set up a personalized home loan consultation! We'll answer any questions you may have and help you understand what options might work for you.
Get a Personalized Consultation
Common Homebuyer Questions

Which loans are eligible?

This program is available on all fixed-rate conventional purchase loans for primary residences.  

The program is not available for refinanced loans or United Heritage portfolio loan programs such as Jumbo loans or ARM’s. The program is also not available for Home Equity, Second Liens, Investment Property, VA or FHA loans.


How do I qualify?

When doing a mortgage with a temporary buydown, the payment you will qualify for is based on what the permanent interest rate will be.  So, if you lock your loan at 6.25%, the amount you qualify for will be based on that rate, even if your initial rate is 4.25% or 5.25%.  This ensures that you will be able to afford the full payment when that time comes.


What if mortgage rates go down?

Mortgage rates are higher now than they have been in many years.   With the temporary buydown option, you can lock into a great rate now, with upfront savings.  If rates fall, you can refinance in the future with great terms and savings.  Plus, if you refinance before your buydown term is over, the remaining buydown funds are applied to your outstanding loan balance!

 

Have More Questions?

We're here to help.

To speak to a UHCU home loan specialist, give us a call at 512.435.4444.
 
Loan Sales - Submit an application or check on the status of an application for Purchase or Refinance:
Monday-Friday: 8:00 AM - 6:00 PM
Saturday: 9:00 AM - 2:00 PM

 


Membership Required. United Heritage policies, terms, conditions, and restrictions apply. Other restrictions and limitations may apply. A fee of up to $23.65 may be assessed on credit reviewed applications regardless of loan funding. Advertised terms are valid from January 6, 2023 through February 28, 2023 and are subject to change without notice. Applicant must lock their initial rate on a purchase loan between 30 and 90 days from the purchase closing date and before February 28, 2023. The promotional offer will effectively reduce the rate by up to 3% for the first year of the mortgage; a custodial escrow account will be funded by the seller-paid credit and funds will be dispersed from the escrow account to the investor to account for the difference in interest during buydown period. Offer valid on Conventional loan types for primary residences. Fixed rate products only. Purchase transactions only. Offer not valid on Refinance loans, Business loans, Consumer loans, Jumbo loans, Home Equity, Second Liens, Investment Property, or ARM (Adjustable-Rate Mortgage) products. Funds are not refundable unless the mortgage is paid off before the funds can be applied. Funds cannot be used to pay past due payments or buy down the mortgage for qualification purposes. Offer cannot be combined with any other promotion. Offer may not be redeemed for cash or credit and is nontransferable. Offer cannot be retroactively applied to any loans and may not be used with any other discounts or promotions. Additional restrictions/conditions may apply. This is not a commitment to lend and is contingent on qualification per full underwriting guidelines. Equal Housing Opportunity. NMLS #630601