What is a Mortgage Buydown in the Long Beach Island Real Estate Market
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LBI Real Estate Mortgage Buydown 
LBI Real Estate Mortgage Buydown 
LBI Real Estate Mortgage Buydown
Long Beach Island Real Estate
An LBI Real Estate Mortgage Buydown is a financing procedure in which a buyer will pay points, which are usually 1% of the loan amount, to obtain a lower interest rate. For some buyers on Long Beach Island, this can make sense if they will hold the mortgage for a long time. Before buying down a mortgage, you have to do some quick math to make sure it saves money.
By : Nathan Colmer | The Van Dyk Group
Cell: 609-290-4293 | Office: 800-222-0131 | ncolmer@vandykgroup.com
Click here to search all homes for sale in the Long Beach Island NJ real estate market
LBI Real Estate Mortgage Buydown
The prospect of a lower interest rate is very appealing, but it does not always make sense to buy down a mortgage in the LBI real estate market. When you consider that you are paying 1% of the loan amount, this will translate to a sizeable payment in most cases. The amount of savings will vary from lender to lender and from borrower to borrower but let’s assume there is a savings of 0.25% for buying 1 point on a mortgage. Let’s do some quick math:
$500,000 mortgage @ 4% interest = $2,387.00/month
$500,000 mortgage @ 3.75% = $2,316/month
The above scenario creates a savings of $71.00/month or $852.00/year but will cost $5,000 to buy down the mortgage. This means a borrower will have to hold that mortgage for around six years before any savings are realized. This can be worth it if the buyer plans to hold the loan for a long time, but it can also be a costly mistake. Keep in mind the above is just a theoretical example, and any specific questions should be directed to a lender to assess the real-world numbers.
Buying in the Long Beach Island Real Estate Market
An LBI Real Estate Mortgage Buydown can save (or cost) a great deal of money, so all buyers in the LBI real estate market need to assess the scenarios available to them before making a decision. Sometimes there are other ways to lower the interest rate, for example, putting more money down, reducing the term of the loan, etc. that can make more sense. If you have any questions about buying, selling or investing in the LBI real estate market, please do not hesitate to contact me.
By : Nathan Colmer |LBI Real Estate Agent | The Van Dyk Group
Cell: 609-290-4293 | Office: 800-222-0131 | ncolmer@vandykgroup.com
Click here to search all homes for sale in the Long Beach Island NJ real estate market
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