Power up in today’s real estate market with 3-2-1 mortgage loan program

With rising home costs and interest rates, some would-be homebuyers may feel like they don’t have many options right now. With the 3-2-1 mortgage program, however, people can reinsert themselves into the market with confidence that they’ll turn the corner on homeownership.

Homebuyers come first

The Jaro Team pushes every button and uses every tool to make homebuying more accessible. The new 3-2-1 buy down lending program is our answer to the homebuyers’ evolving mortgage needs.

It reduces the stress of today’s higher housing costs by creating a little extra breathing room, especially during the first few years of a mortgage loan.

Here’s how it works

When borrowers choose the 3-2-1 mortgage program, they will enjoy a lower interest rate for the first few years of the loan, before it switches to a permanent, yet manageable rate in the following years.

Borrowers will pay an up-front fee, like purchasing discount points, to reap the benefits of the 3-2-1 mortgage program. The 3-2-1 loan program is used for primary residences and second homes, but not investment properties. It also doesn’t work in tandem with an adjustable-rate mortgage program.

The “3-2-1” refers to how the interest rates are structured during the first three years. Homeowners will pay 3 percent less on interest in the first year; in the second year the discount will be two percent; and in the third year it’s a one percent reduction.

Once the lower-interest rate period ends, the permanent rate kicks in for the remainder of the loan.

More benefits

A reduced mortgage rate translates into additional savings and buys time before the mortgage resets. For example, if there’s a big-ticket item loan with three years left before it’s paid off, the 3-2-1 mortgage buydown program creates some financial wiggle room to focus on other commitments.

Lower monthly payments for three years are an opportunity to redirect income toward a savings account. After the lower interest rate period ends, homeowners will have clarity about how much they will pay moving forward, allowing them to prepare the family’s budget.

Last but not least, the homebuyer can skip paying for the upfront cost of the 3-2-1 loan. In some instances, home sellers are willing to pick up the tab as an incentive to accelerate the home sale. Homebuilders are also sometimes willing to use a similar tactic to get homebuyers into a brand-new home.

This interest rate reprieve lets homeowners take on homebuying with renewed confidence. The 3-2-1 buydown loan makes homebuying more accessible and increases a homebuyer’s financial wherewithal during the critical first few years of homeownership.

Contact us today to learn more!


We have increased our conventional lending limit to give homebuyers a competitive edge

The rising costs of homeownership and rates have become a constant, much to the frustration of many future homeowners. To help alleviate some of this, however, we have increased our conventional lending limit to give homebuyers a competitive edge they need in today’s complex real estate market.

Our conventional loan limit is now $715,000, up from $647,200. We’re getting ahead of the Federal Housing Finance Agency, which is expected to make the limit increase later this year.

This gives homebuyers access to tens of thousands of dollars of more buying power. This forward-thinking approach allows homebuyers and their real estate team to enter the field with the ability to make strong and attractive offers to offset competing buyers.

Most conventional lending programs have limits on how much someone can borrower, based on where they intend to purchase a home. Areas with higher costs of living will feature higher limits, for example.

Also known as conforming loan limits, buyers must stay under the lending threshold to take full advantage of the lending mechanism. Otherwise, homebuyers might have to turn to a jumbo loan, which has varying requirements. They typically have higher rates, stricter underwriting standards and require a larger down payment.

The baseline loan limit is the most a buyer can borrow assuming all their financial details are in good standing to manage a mortgage loan. For multiple housing units, the conventional loan limit will be higher. Unlike FHA loans, conventional loans are not backed by the federal government. In most cases, conventional loan limits are higher than FHA programs. Conventional loans are offered by private mortgage companies and are administered following rules set by Fannie Mae or Freddie Mac.

Conventional loans can be conforming or non-conforming, which means it’s a private-sector-backed mortgage. Conforming loans are handled by Fannie Mae or Freddie Mac. These entities are known as government-sponsored enterprises. They are setup to open access to credit opportunities to increase homeownership for the greater public good.

While not technically guaranteed by the federal government, these loans necessitate loan limits. This protects the government in the event of any extended lending losses.

If you have any questions, don’t hesitate to contact us today!