Home Finance | 11.27.2023

The Solution to High-Interest Rates

One of the biggest concerns buyers face when purchasing a new home is often the interest rate on their mortgage. With interest rates in the marketplace currently high, finding a way to lower these rates can make a significant difference in the overall cost of homeownership. Arive Homes offers a unique solution known as mortgage rate buy-downs.

Arive Homes Offers Mortgage Rate Buy Downs

As a Utah home builder, Arive Homes understands the impact interest rates can have on the affordability of a new home. That’s why we have introduced a 2-percent interest buyback offer, allowing buyers to reduce their mortgage interest rates by two percentage points. This incentive, often seller-paid, has become a standard inclusion in most of Arive Homes’ contracts, making it an attractive option for potential homeowners.

But how exactly does an interest rate buy-down work?

What is an interest rate buy-down?

An interest rate buy-down is a financial strategy that allows homebuyers to reduce the interest rate on their mortgage. Lenders typically calculate the buy-down fee as a percentage of the loan amount and can vary depending on the specific terms of the buy-down agreement.

Interest rate buy-downs can lower a homebuyer’s monthly mortgage payments, making homeownership more affordable in the long run. Those who plan to stay in their home for a significant time benefit most, as the savings from the lower interest rate can add up over the years.

How does a mortgage rate buy-down work?

Arive Homes makes obtaining a mortgage rate buy-down simple and hassle-free. Arive Homes has established relationships with reputable lenders specializing in mortgage rate buy-downs, ensuring buyers can access the best possible terms and rates.

Once a buyer has chosen a home and secured financing, Arive Homes will work with their preferred lender to negotiate the terms of the mortgage rate buy-down. This negotiation typically involves paying a one-time fee upfront, which then lowers the interest rate on the mortgage. This fee is often covered by the seller, but not always. The fee will depend on the loan amount, desired interest rate reduction, and the specific terms agreed upon.
Interest Date Buy Down - Mortgage Rate Buy Down - Arive Homes

What is the difference between a temporary and permanent mortgage rate buy down?

There are two main types of mortgage rate buy-downs: temporary and permanent.

A temporary mortgage rate buy-down allows homebuyers to reduce their interest rate for a specified period, typically one to five years. The reduced interest rate will apply during this temporary period, resulting in lower monthly mortgage payments. At the end of the temporary period, the interest rate will typically reset to the original rate agreed upon. Buyers who anticipate an increase in income or plan to refinance their mortgage will benefit most from this type of buy-down.

On the other hand, a permanent mortgage rate buy-down offers a long-term reduction in the interest rate. The reduced interest rate will apply for the entire duration of the mortgage, resulting in consistent savings over the life of the loan. This type of buy-down is ideal for buyers who plan to stay in their home for an extended period and want to maximize their savings.

How much does an interest rate buy-down cost?

The cost of an interest rate buy-down can vary depending on the loan amount, desired interest rate reduction, and negotiated terms. Typically, the upfront fee for a mortgage rate buy-down is calculated as a percentage of the loan amount. This fee can range from 1 to 3 percent of the loan amount.

While the upfront cost of a mortgage rate buy-down may seem significant, the long-term savings achieved have value. By reducing the interest rate on a mortgage, homeowners can save thousands of dollars over the life of the loan, especially if they can negotiate a seller-paid buy-down.

If you are in the market for a new home and want to take advantage of the benefits of a mortgage rate buy-down, turn to Arive Homes as your Utah home builder. Our expertise in negotiating mortgage rate buy-downs with reputable lenders ensures buyers can secure the best terms and rates.

Learn more about Arive Homes and our mortgage rate buy-down program. With our commitment to affordability and quality, Arive Homes is the Spanish Fork home builder you can trust to make your dream of homeownership a reality. Explore our community and start your journey towards a lower interest rate today.