NOVA’s Buydown Loan programs are a great way to ease into your home loan payments when interest rates are high. They provide a temporary payment reduction for the first one or two years of your loan. Afterwards, your payments return to normal based on the original terms and interest rate of your loan.
NOVA 1/0 Temporary Interest Buydown Reduction
The first year’s interest payments = 1% below your loan’s interest rate.
Interest payments for 2nd year until end of loan = your loan’s interest rate.
NOVA 2/1 Temporary Interest Buydown Reduction
The first year’s interest payments = 2% below your loan’s interest rate.
Interest payments for 3rd year until end of loan = your loan’s interest rate.
Sample Temporary Rate 2/1 Buydown Scenario*
Home purchase price: $400,000.00
Loan Amount: $320,000.00
Interest Rate: 6.5%
Monthly Payment year 1
at 2% below interest rate: $1,891.39
(includes principle, interest,
tax & insurance)
monthly savings year 1: $401.23
Monthly Payment year 2
at 1% below interest rate: $2,086.92
monthly savings year 2: $205.70
Monthly Payments years 3-30: $2,292.62
*Above scenario is an example only and does not represent current interest rates. Scenario is based on 80% LTV, 720+ FICO, and 7.065% APR. Other conditions and restrictions may apply. Available programs are subject to change without notice. Contact your Loan Officer for more information.
How it Works.
A single source of funds, usually from the seller, home builder, lender or a real estate agent, contributes money to temporarily “buydown” the mortgage interest rate on your loan, by 1%, 2% or 3% to reduce your monthly payments for the first one or two years. When your loan closes, these funds are placed into an escrow account from which a portion will be released and applied to your loan payment each month to make up the difference from what your regular payment would normally be. Your NOVA Loan Officer will work with your real estate agent to secure your approved source of funds.
Benefits
You’ll have lower monthly payments from a reduced interest rate for the first one, two or three years of your loan.
These are Fixed-Rate Loans so all your payments will be predictable.
This is an easier way to buy a home when interest rates are high, or to afford the monthly payments on a higher priced home.
A Temporary Buydown can benefit sellers, too, because it may be a way for them to sell their home quicker, rather than continue waiting for their home to sell at the asking price.
Talk to a NOVA Loan Officer to learn how to make this program work for you.
The Program information shown is for informational/educational purposes only and does not represent a commitment to lend or extend credit. Other terms and conditions may apply. Contact your Loan Officer for more details.
