Rate buy down lender

[William Strom]

I’d like some information on rate buy downs. Can all lenders do them. I’m a new investor. I secured a 5.75 percent rate on a new build recently. I’d like to buy a condo as a LTR but I’m going to need the rate to be around 5 for the deal to work. 

[Jon Puente]

Hey William, 

Yes, all lenders can do rate buydowns.  Here is the breakdown (for beginners) -  

You can pay "Points" to reduce your interest rate. One Point is 1% of the loan amount, so if your loan is 300K, then one point would be 3K.   For every point you pay, it can reduce your interest rate approx .25%.   

The tough part about what you are talking about is that rates on a primary home are better than rates on INV properties.  5.75% is a great primary rate (especially right now).  INV property rates are at least 1% higher than that, especially for condo's.  If your deal won't work because of the rate, it's most likely not a great deal. 

Great Question!