With Mortgage Rates Surging, Buydowns Are Ready for a Reboot
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Home buyers are looking for ways to whittle down their mortgage rates. As a result, a once-popular home-selling tactic is making a comeback. It's called a temporary buydown, and it was widely used when mortgage rates were zooming upward in the late 1970s and early 1980s.
The revival of the temporary buydown is timely, as mortgage rates are at a two-decade high, with the Federal Reserve expected to raise the floor under mortgage rates twice more this year. Fewer people are buying homes because rising rates make homeownership unaffordable. In some markets, negotiating power is even shifting from sellers to buyers.
In these conditions — when interest rates are rising and home sellers must make an effort to lure buyers — temporary buydowns can flourish. It's time to dust them off and put them to use.
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