Cynthia Cohn & Associates, Inc. Real Estate Brokerage, Pasadena.

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How A 2-1 Mortgage Buydown Works
As of November 2022, interest rates are hovering around 6.8% in the United States. That’s up from just above 3.2% in January 2022. While the Federal Reserve is working on cooling inflation, the housing market is working hard to adjust to rates and still provide the American dream of home ownership. If you’re in the market for a new home, interest rates on new 30-year mortgages may seem daunting. There’s another option available to qualified buyers, and that’s a 2-1 buydown. What’s a mortgage buydown? Let’s break it down: A 2-1 buydown is a specific kind of financing. Mortgage rates are determined by the lender, not the federal government. But they are influenced by market trends, regardless of sector. Because of rising interest rates, home builders and lenders concerned with closing mortgages amid rate hikes have leverage to offer a buydown, which gives new buyers a lower rate for two years. Buydowns are temporary, but impactful. Typically buydowns are tiered between one to two years. In the first year, it’s typical to see a mortgage at two full percentage points less than the market rate. In the second year, mortgages are 1% less than the market rate. The expectation is that after two years, buyers will go back to the “normal” rate. This results in a mortgage payment adjustment, so buyers should budget for, and be aware, that their mortgage payment will likely increase. It’s a good negotiation point when buying/selling. Gone are the days of asking home builders and sellers to pay closing costs. The market is simply too competitive. But since the market has cooled, sellers and home builders realize that they need some incentive to attract buyers. If you’re looking for a negotiation lever to pull, asking for the seller to provide a buydown may be key. Here’s an example of a 2-1 buydown from our friend Floyd Walters at BWA Mortgage. This instance is if the current 30 year mortgage rate is 6.5%. On a 2-1 buydown you would pay the following rate: 4.5% for the first year 5.5% for the second year 6.5% for the remaining years of the loan There are lots of variations of the product but in its simplest form, a seller would pay the one-time fee of 2.38% of the loan amount to buy down the rate. Here’s how that might look on a $1,000,000 purchase with a buyer putting 20% down and needing to borrow $800,000. $800,000 loan amount x the 2.38% buydown cost = $19,040. So for a seller, that’s equivalent to accepting a $980,960 sales price, so a 2% reduction in asking price. Working with a knowledgeable agent is the key to not only finding the right home but finding the best deal that aligns with your finances. If you have questions about what a buydown could mean when purchasing your next home, let’s chat. Our team would love to work with you. Call us today! 626-714-6808
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Reviews

9119 Duarte Road | The Wootan Family (Sellers, October, 2021)
I cannot let this year end without writing a review to let it be known, that Cynthia Cohn is an Absolutely Amazing Stellar Real Estate Broker!!! The fabulous experience my family and I had by hiring Cynthia Cohn & Associates was simply the Best decision we could have ever made when the time came to make such an important decision to sell our parent's Family Home after 50 years of ownership in San Gabriel. Our family went through many challenges in 2021, Cynthia was a saving grace through it all! The way she showed up with her incredible support, NEVER pushy in any single way, only her true sincerity in wanting our family to be responsibly informed to make the best decision for our family, that was her top priority. Cynthia went above and beyond in every way to guide and protect our family. She and her incredible team consistently gave me and my family the utmost respect, top-of-the-line real estate knowledge, always positive, kind, understanding, and extremely supportive with each and every single interaction throughout the entire process. Cynthia and her team are the most hard-working professionals. Such diligent work was provided in every step to prepare and sell my family's home, it was AMAZING! We were thrilled with the end result of our family home getting top dollar, $80,000 over the asking price, all done so quickly and with unimaginable ease! It is my pleasure to Highly recommend Cynthia Cohn & Associates to help you with all your real estate needs! To have the trust and dependability provided by such an incredibly smart, warm, and true professional real estate broker, Cynthia Cohn is priceless!!! Sincerely, The Wootan Family
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Charitable Giving

Women Networking For Women Raises $27,955
Through Women Networking For Women, a group I co-founded, we raised $27,955 for Door of Hope at our October fundraiser. Over 100 Pasadena professionals came together to network and raise funds. It was so great to see everyone! Thank you to our sponsors, attendees, event coordinators, and behind the scenes team for making this such a success. Here's a quick snapshot of the event. $27,955 total money raised 115 tickets purchased 1 Platinum Sponsor $5,000 1 Gold Sponsor $2,500 9 Silver Sponsors $1,000 8 Bronze Sponsors $500 16 Friend Sponsors $250 Our goal was to raise $31,000 to help Door Of Hope make furniture and painting improvements to their living spaces. We are a tad short, but there's still time to donate to this cause to meet our goal! In the notes when you checkout, please put "Women Networking For Women." Supporting local organizations and other women brings me so much joy. I truly believe Winston Churchill got it right: “We make a living by what we get. We make a life by what we give.”
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601 West Montana Street, Pasadena

$1,225,000
3 BEDS / 2 BATHS

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2125 Oakdale Street, Pasadena

$1,495,000
3 BEDS / 1 BATHS

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Open I Sunday 2-4 PM

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11635 Amigo Avenue, Porter Ranch

$899,000
3 BEDS / 2 BATHS

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11470 Bessemer Street, North Hollywood

$925,000
0 BEDS / 0 BATHS

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497 South El Molino Avenue, 305, Pasadena

$499,000
2 BEDS / 2 BATHS

$51K Over Asking I Multiple Offers

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1850 Paloma Street, Pasadena

$1,250,000
3 BEDS / 4 BATHS

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$30K Over Asking I Multiple Offers

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850 Adelaide Drive, Pasadena

$1,399,000
3 BEDS / 2 BATHS

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Multiple Offers

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210 North Naomi Street, Burbank

$1,149,000
3 BEDS / 2 BATHS

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$6K Over Asking

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1909 East Orange Grove Boulevard, Pasadena

$1,349,000
3 BEDS / 3 BATHS

$171K Over Asking I 9 Offers

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