Lower your Interest Rate with a 2-1 Buydown

Here's a quick rundown of what's been happening with the recent FED meeting and how the mortgage market has reacted to it.

So, the FED decided to keep rates unchanged, which is good news. But the even better news came from Jerome Powell, the FED chair. He mentioned that rates have hit their peak and that the focus has shifted from considering more rate hikes to discussing when rate cuts might kick in by 2024. As a result of this shift in sentiment from the FED, we've seen mortgage rates improve by approximately 0.25% immediately.

In talking with my lending partners, they are telling me for most loan scenarios with a good credit score and such, they are comfortably under the 7% mark. This is a stark change from just two months ago when the industry was looking at 8%, a number that had not been seen in many years. Overall, it's been a positive turn in the mortgage market that I was expecting but ultimately happened a little sooner than I was predicting. I'm happy to have been wrong in this scenario!

Right now, there's a window of opportunity, but I don't think it will last long. And guess what? If rates keep dropping—as I anticipate they will for 2 reasons—get ready for some increased competition throughout the rest of 2024. I think right now is the time to buy, maybe use a short-term 2-1 or 1-year buy down, then refinance again towards the end of 2024.

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