Rate Buydowns

Rate buys downs are still happening.  Even though mortgage rates have come down about 1% from their peak last fall, homebuyers are still buying down their rates.  A rate buy down is a way to get a lower interest rate over the life of the loan by paying upfront fees.  Black Knight, a housing data aggregator, says that 57% of buyers used a rate buy down on their loans in January.  While that’s certainly a large percentage, it was as high as 71% back in October.  Whether or not buying down the rate is a good idea depends upon your situation.  If you plan to have the loan for just a few years, it probably doesn’t make sense because you won’t have time to recoup the upfront fees.  But if you plan to have the loan for a while, and don’t like the prospect of trying to time a refinance later, then a buydown is something you should consider.