There are many different types of mortgage loans available to today’s Knoxville TN homes buyer. A buydown mortgage may be the key to affording your dream home.
Permanent and temporary buydown mortgages are financial tools used by lending institutions to reduce the interest rate on a mortgage loan. With this type of financing extra points (sometimes called discount points) are paid upfront at closing. In simple terms, a point is equal to one percent of the principal loan amount total. A buydown is an upfront payment. The purpose of this payment is to enable the financial institution to lower the monthly payments. A buydown is sometimes used as a tool to enable the buyer to qualify for a mortgage.
Buydown mortgages have many benefits.
Temporary buydown mortgages appeal to the home buyer who has prospects for a substantial income increase in the next few years. For example a spouse may currently be in school, but upon graduation will have excellent employment prospects. A temporary buydown mortgage allows the buyer to make lower monthly payments during the first few years of the loan. During these years the interest rate is lower than the actual mortgage loan rate. This results in lower monthly payments early on in the life of the loan. Buyers with lower monthly incomes can qualify for larger loans with this strategy. In general, a buydown mortgage allows the buyer to own more house for the money. In some cases it is the best way to qualify for any loan because of the lower interest rate.
A permanent buydown mortgage reduces the interest rate of the mortgage for the entire life of the loan. This reduction of the interest rate will cost the buyer several points at closing. More information about buydown mortgages is available at www.davidhamilton.com.
There are many financing options available to home buyers in the Knoxville TN Homes area. Contact David Hamilton to get advice for your specific mortgage needs.
Free information about buying, selling or investing in Knoxville real estate is available. Have questions? Feel free to call me with your real estate or mortgage related questions at 865-690-1300 or by cell at 865-310-0636. Complete information about the Knoxville real estate market including current Knoxville TN homes for sale, property values and more is available online at www.davidhamilton.com.
David Hamilton
Ferguson Realtors
865-690-1300 Office
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