23
Jul
By Mike Pfefferman
Mortgage Rates

The Benefits of Mortgage Rate Buydowns

When purchasing a home, every detail matters, especially your interest rate. One strategy that many buyers overlook is the mortgage rate buydown. A buydown allows you to lower your interest rate for the first few years of your loan, or even permanently, by paying upfront fees at closing. This option can significantly reduce your monthly payments, offering financial relief when you need it most.

Types of Mortgage Rate Buydowns
There are two common types of buydowns. A temporary buydown, such as a two one buydown, reduces your interest rate for the first two years. For example, your rate might be reduced by two percent in the first year and one percent in the second year. After this period, your rate returns to the original fixed rate for the remaining term of your loan. A permanent buydown, on the other hand, involves paying points to lower your interest rate for the entire life of the loan.

Why Consider a Buydown?
The primary benefit of a buydown is lower monthly payments, especially early in the loan term when expenses related to moving, furnishing, and settling into your home may be highest. For first-time buyers or those purchasing a larger home, this early savings can ease the transition and protect your budget.

Additionally, a lower interest rate reduces the total interest paid over the life of your loan, potentially saving you thousands of dollars. For buyers planning to stay in their home long-term, a permanent buydown can be an especially smart investment.

Builder and Seller Incentives
Builders and sellers sometimes offer to cover the cost of a buydown as an incentive, making it an even more attractive option. This is common in slower markets or with new construction homes, so it is worth asking about this possibility during negotiations.

Is a Buydown Right for You?
It is important to weigh the upfront cost against your long-term plans. If you do not expect to stay in the home for several years, the savings from a buydown may not outweigh the initial expense. Consulting a mortgage professional will help you understand if a buydown matches your specific situation.

Final Thoughts
Choosing a mortgage rate buydown is not just about saving money, but about creating financial comfort. Whether temporary or permanent, a buydown can offer breathing room when you need it most and long-term savings that benefit your financial future.

If you are curious about how a buydown could work for you, a mortgage expert can provide personalized guidance.

22
Jul
By Mike Pfefferman
Mortgage Tips

Are Low Down Payment Programs Right for You?

Purchasing a home is a significant milestone, but for many buyers, saving for a large down payment can feel overwhelming. Thankfully, low down payment programs can offer a solution, making homeownership more accessible than ever before. However, before choosing one of these options, it is important to understand both the benefits and potential drawbacks.

Low down payment programs are designed to help buyers secure a home with as little as three percent to five percent down, depending on the loan type. Popular options include FHA loans, conventional loans with reduced down payment requirements, and programs backed by agencies such as Freddie Mac and Fannie Mae. In some cases, buyers may also qualify for zero-down loans, such as USDA and VA loans, if they meet specific eligibility criteria.

One major benefit of a low down payment program is that it can significantly shorten the time it takes to buy a home. Instead of spending years saving for a traditional twenty percent down payment, buyers can enter the market much sooner. This can be especially helpful in rising markets, where home prices may outpace savings growth.

However, there are important considerations. With a smaller down payment, buyers typically pay private mortgage insurance, known as PMI, which increases the monthly payment. Over time, this can add up to thousands of dollars. Additionally, smaller down payments result in higher loan amounts, which means paying more interest over the life of the loan.

Despite these factors, many buyers find that the benefits outweigh the costs, particularly when home prices are climbing. Building equity in a home often offsets the costs of PMI in the long run. Plus, some programs offer options to eliminate PMI once a certain amount of equity has been reached.

Another valuable feature of many low down payment programs is the flexibility in credit score requirements. While a higher score will generally yield better rates, many programs are accessible to buyers with less-than-perfect credit, opening doors for those who may not qualify for traditional loans.

If you are considering a low down payment loan, speaking with a mortgage professional can help you understand the best program for your situation. Factors such as your income, credit score, location, and long-term financial goals will all influence which loan type makes the most sense.

Remember, homeownership is not only about affording the monthly payment, but also about feeling financially secure. Choosing a low down payment program can help you get there faster, but only if it fits within your broader financial plan.

If you are ready to explore your options, a mortgage expert can help guide you toward the right program.

21
Jul
By Mike Pfefferman
Financial Reports

What’s Ahead For Mortgage Rates This Week – July 21st, 2025

While inflation has slowed down since the pandemic, it is showing a faster-than-expected rise for consumers, as the CPI (Consumer Price Index) has reported a higher than expected 0.3% increase, contrasted to the 0.2% expected increase.

Meanwhile, the PPI (Producer Price Index) has proven to be entirely flat, with the largest takeaway being that signs of tariff-related inflation are — at best — scattered among data reports, leading to many speculating that the impacts have been overestimated.

Given continued inflation for consumers, it is very unlikely the Federal Reserve will make any adjustments to the rate as it adopts a “wait-and-see” approach to the administration’s policies. Another noteworthy data release is retail sales, which has shown to snap back after the concerns about tariffs and widespread price increases have eased.

Consumer Price Index
Consumer prices in June posted the biggest increase since the beginning of the year and are likely to keep the Federal Reserve from cutting interest rates later this month, but there were only scattered signs of tariff-related inflation. The consumer-price index rose 0.3% last month, the government said Tuesday, and matched Wall Street’s forecast. It was the biggest rise since January.

Producer Price Index
Wholesale prices were unchanged in June and showed only a mild effect from U.S. tariffs, adding to the growing view that trade wars won’t lead to a big surge in inflation. The flat reading in the producer-price index came in below the Wall Street forecast of a 0.2% increase.

Retail Sales
Receipts at retail cash registers rose 0.6% last month, the government said Thursday, based on seasonally adjusted numbers. That was three times the Wall Street estimate.

Primary Mortgage Market Survey Index
• 15-Yr FRM rates saw an increase of 0.06% for this week, with the current rates at 5.92%
• 30-Yr FRM rates saw an increase of 0.03% for this week, with the current rates at 6.75%

MND Rate Index
• 30-Yr FHA rates saw an increase of 0.04% for this week, with the current rates at 6.39%
• 30-Yr VA rates saw an increase of 0.03% for this week, with the current rates at 6.40%

Jobless Claims
Initial Claims were reported to be 221,000 compared to the expected claims of 234,000. The prior week landed at 228,000.

What’s Ahead
After inflation reports, there will only be the Leading Indicators report in the schedule for next week.