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

by | Sep 20, 2022

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!