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3/2/1 Rate and payment Reduction Plan

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The 3/2/1 Rate and Payment Reduction Plan. This made as the seller’s housing market is quietly shifting to a buyer’s market. With seller concessions making their 2022 debut. Higher interest rates are taking many buyers out of the market. Leaving more homes up for grab with less competition. This shift has sellers lowering their prices and offering concessions to get their homes sold. A popular seller’s concession is the 3/2/1 Buydown because it reduces the buyer’s interest rate by 3% 2% the first year and by 1% the second year for a very reasonable seller concession.

3/2/1 The Rate and Payment Reduction Plan for FHA, VA, CONVENTIONAL loans. For the first year of the mortgage, the borrower’s monthly payment is based off an interest rate that is 2% lower than the note rate. For the second year of the mortgage, the monthly payment is based off an interest rate that is 1% lower than the note rate. In year three, borrowers return to the full note rate and corresponding payment for the remainder of the mortgage term.