How to Get A Lower Mortgage Payment

Temporary Rate Buy Down

The temporary rate buydown program is a fixed-rate loan that reduces the interest rate and, therefore, the payment for a temporary period on purchase loans. Usually, the choice is the reducing the rate for the first one, two, or three years of the 30-year term. At the end of the Temporary buydown period, the rate returns to the original note rate for the remaining term of the loan. For example, A 2-1 rate buy down reduces the rate by 2 percent the first year, one percent the second year, and returns to the initial note rate from years 3 to 30. The benefit is reduced interest rate now, hoping the economy will provide lower rates later, and the homeowner can permanently refinance to a substantially lower rate at that time. As the name says, Temporary Rate Buy Down, there is a cost for the lower initial rate often paid by the seller in the form of a seller concession. Recently, property listings have been offering a rate-buy-down as a seller-paid incentive to generate interest in the property. The cost of the rate buydown is about the same amount as the buyer saves in interest. A buydown calculator is often used to determine the price of a 3-2-1 and 2-1 a 1-1 or 1-0 rate buydown; call us, and we will share it. 

Call us to calculate the fee for the buy-down you want, and we will assist your realtor in helping get the seller concession to lower your payment! 

Lower Interest Rate 

This one is the most obvious and directly affects the payment amount. Interest rates are based on a matrix of credit score, down payment percentage, occupancy type, and property type, term of the notes. The FHFA sets the fees associated with the matrix that all lenders must follow. For example, an investment property will have a high rate than a primary residence because it has greater credit risk. Shop lenders for rates and fees. Paying points to decrease the rate permanently may be an excellent financial move. Traditionally paying 1% of the loan amount buys down the rate by .25%; however, in today’s market, it can be as much as .5% -.75%! Every lender will have different parameters for this option; CharterStone Mortgage is hyper-competitive. Let us find you a great rate and a lower PMI payment.  

Lower Private Mortgage Insurance Rates

 We have access to discounted PMI premiums that help keep your payment lower.  Various private mortgage insurance companies provide PMI through the lender. A matrix of credit score, down payment percent, property type, occupancy type, and debt-to-income ratio determine the monthly mortgage insurance premium. Some lenders receive or provide discounts from the standard premium and pass them on to the consumer.  Shopping for rates and a lender or broker that offers lower PMI premiums is key to getting the best available payment. Other options for paying PMI are available such as a one-time premium paid at closing. Some buyers have the seller contribute towards closing costs to pay this premium, so the buyer does not have monthly PMI. Call us to compare your options. 

Affordable Home Programs

Fannie Mae and Freddie Mac are mandated to promote homeownership. They provide affordable loan programs to first-time homebuyers with lower rates and private mortgage insurance premiums than standard programs. We will compare both options to determine the best program to lower your overall payment.  Call us to see if you qualify for one of these lower-payment programs. Don’t pay more than you have to!  

Down payment assistance programs and the Florida Hometown Heroes Housing Program may be other options to help you buy your new home!