How to Get a 3.99% Mortgage Rate Right Now (Legally) | Buydowns 2026

Patriot Nation is 2026 and we do know where interest rates are and they're in the upper fives up to about mid60s depending on your credit scores and what kind of loan program you're going to get. But what if what if I could get you at least for the first year at 3.99% second year 4.99% and then go to your original rate the rest of the way saving you thousands of dollars without costing you a penny. How do we do that? It's through the magic of interest rate buyowns. So that's what the topic is going to be today. The magic of interest rate buyowns. We're going to use very tough this negotiation with the selling party through seller concessions to pay for your interest rate reductions for the first couple years. That's called a interest rate buy down. We're going to show you how to save thousands of dollars. As always, I'm going to give you examples along the way. Hit the like and subscribe. Share this with your friends. And let's kick off this rodeo right now. Hi folks, I'm Kevin Fagan. I'm the mortgage patriot on your side nestled here in the Hill Country above San Antonio, Texas, serving all you proud Texans and all you great folks all around the country. Another great one. Why? Because we are talking about the magic or the impact of interest rate buydowns. So, as we get into that content, if you would hit the like and subscribe, it really helps bringing my my content to the forefront. And I put a lot of time into it as you can see. All kinds of topics on different types of loan programs, how to lower your closing cost, how to use renovation loans, for example, all kinds of different topics, how to negotiate. So, anytime that you can like and subscribe and and comment for that matter, this helps bring all my content to the forefront. So, do that for me if you would please. Thank you. And let's get to that content right now. Here's the quick flow of this video. I'm going to define, you know, what an interest rate buy down is, why you would want it, what are the different types, and how much can you save per month because that's all that's all this is about, right? We're just going to lower the rate, which lowers your payment. On an average, let me give you this. On an average $300,000 first home purchase or even second home purchase, you're going to save with an the buy I'm going to show you $360 per month for the first 12 months. And then the second month or excuse me, the second year, you're going to save about $180 per month for the second year. So that's putting thousands of dollars back into your pocket that you can use for anything that you'd want to use it for. So let's get into all that right now. So what is an interest rate buy down? Oh great, mortgage pay. Well, it's simply this. The lender in exchange for giving them money upfront, they're going to lower your interest rate for a number of years. Usually the first, second, or and or third years. Let's let's talk about what types of buy downs are. And I'll make this an example easy. So you have to know what your market rate is. Let's assume a market rate right now. In other words, if your FICO is, let's say, were 680, you have an FHA loan, your market rate is 5.99%. With a 10 buy down, the first year would be 1% below 5.99, coming in at 4.99. The remaining 29 years would be at 5.99. There's also a 21 buy down. In your first year, you'd be 2% below the 5.99. So, your first year would start at 3.99. Second year would be 4.99 and then your last year or last 28 years would be 5.99. Lastly, you have a 321 buy down. What is that? Well, just like it sounds, the first year is 3% below. So, you would enjoy a 2.99% interest rate the first year, 3.99 the second year, 4.99 the third year, and the remaining 27 years back to the 5.99%. That's how it works. And we let's explore the math of that and why this all makes so much sense. One quick note on interest rate buy downs uh before we get into some another example. This is not to be confused with a discount point. There's what they call discount points. It's a similar concept. A discount point is something that you, the buyer, the borrower is paying for to buy down the rate. That's a discount point. Let's say again the market rate is 5.99. to get to say 5 and a4% as a permanent 30-year rate, you as the buyer borrower has to be charged something. That's called the discount and and it might be one and a half points. Each point is a percentage of the loan amount. So those are discount points. The interest rate buyowns are something to the seller. We want the seller to pay for those. We don't want you to pay for anything. So, I don't like the discount points even though sometimes they're necessary, but we we're talking about example where the selling party is going to contribute to this buy down. Just keep that in mind. Let's take an example of a $300,000 purchase because that tends to be the kind of the median uh purchase price of a first-time home buyer, sometimes even a second time home buyer. So, let's take the case of a 21 buy down and let's say it's an FHA loan at about a 660 680 score. Your market rate right now in the middle of uh 2026 is going to be about 5.99%. So the 21 buy down your first year is 2% less. That's 3.99. On that FHA loan on a $300,000 purchase, your principal and interest is going to be about $1,44. At 5.99, the original uh market rate, that amount, principal interest would be $1,764. So there is a $360 difference lower monthly payment in the 3.99 than than the 5.99. That's an enormous savings. That $360 per month. Second year we go up to $4.99%. That principal interest amount is $1,579 compared to your base rate, your market rate. That saves you an additional $180 per month. So, in the first year, you're saving $360 a month. The second year you're saving $180 a month. Those are dramatic savings over a 24-month period. That comes to over $6,500 worth of savings. Not bad at all using a 21 buyown. Uh before I get into how to negotiate for the buy downs, uh look at this right here. This is a website called webinar.theort mortgage.com. webinar.the mortgage.com. What is that? That is a series of webinars that I give about every third or fourth Thursday ongoing where I take about 45 to 50 minutes. I talk you through first-time home buyers start to finish. Everything you need to know, pre-approval, engaging the loan officer like myself and a real estate agent like myself, negotiation tactics, what to do when you're under contract, things to know when you go into closing. I from start to finish, from, you know, pre-approval to the keys. You're going to learn a lot. Everybody that's gone through it has really thanked me for it. There's Q&A. I show you examples of documents. You'll get to know me a little bit better. I get to know you. It'll be fun. So, sign up for that at the webinar.orgpatriot.com. And I'll see you at the next uh Thursday evening webinar. How do you get these buydowns uh from the seller? Well, because they're not naturally just going to roll over and pay for your buy downs. But in a balanced market, which is kind of where we are certainly in Texas, but a lot ac across the country, meaning buyers don't necessarily have the upper hand, sellers don't necessarily have the upper hand. It's relatively balanced. That means you can negotiate pretty fairly. And on a $300,000 purchase, I'm averaging for my clients about $10,000 of seller concessions. Meaning the seller is willing to negotiate and pay you, the buyer borrower, at closing. $10,000 on average is what I'm saying to help cover your closing cost. So, what is the cost for that 2-1 buy down? We just showed that example of a 21 buy down on a $300,000 uh purchase. That cost the the lender that's going to ask for we're paying the lender. the lender's going to need about $6,500 to give you that 21 buy down. So, if we're averaging $10,000 of seller concessions, all we do is take $6,500 of out of that 10 and give it to the lender as a buy down amount targeting that 21 buy down. You'll still have $3,500 left over from the original $10,000 of seller concessions. So, you can use that remaining $3,500 to lower your your just your your transaction cost on the deal. In other words, your cash to close the check you would write. We can lower that $3,500 in addition to paying for $6,500 of a 2-1 buy down. Hopefully, that all makes sense. But it's all based on negotiating with the selling party for seller concessions. And I can help you with that. Okay, listen to this very carefully because this is a very cool promotion by one of the lenders that I use. Remember, I'm a mortgage broker, meaning I shop for your benefit across platforms of lenders. Okay? So, this one lender exclusive deal across the country is offering a one zero buy down for free. Meaning, we don't even have to negotiate with the selling party. The lender is going to just just absorb that cost themselves. So, let's go back to that example of the 5.99 being the market rate on an FHA loan on a $300,000 purchase. the one zero buy down that this lender is offering you is going to start off at 4.99. So you're going to get 4.99 for free for the first year. That saves you like in our example earlier $180 a month for the first 12 months. Incredible deal. Then it's going to go back to the 5.99. This assumes, of course, your credit scores are good and your base rate would be 5.99. So, but it's only going to last through the end of June. So, we got about 60 day or excuse me, 30 days, got a month to get under contract and enjoy that nice promotion. So keep that in mind. So you as a firsttime home buyer, you know, you have a choice. You kind of a balancing act. I always refer to it as uh you can maximize in maximizing the seller concessions. Again, let's say on average $10,000 on about a $300,000 house. You can use all of that to to reduce your closing cost and write a small check. Or you can use a portion of that to situate yourself either with a three two one buy down or a 21 buy down or a one zero buy down. Let me help you do the math and see what those mortgage payments look like. So, if the lowering your mortgage paid pay payment is more important to you, you might want to use money towards the seller concessions towards the buy down. If you're not concerned about that, but you really are concerned about writing the smallest check possible, then we won't go with the buy down. We'll use all the seller concessions to lower our and slash our our closing costs. So, hopefully all that makes sense. Remember, this is important. Now, go to that webinar.com or webinarthemortgatriot.com and sign up for those Thursday evening uh webinars. It's complimentary. You're going to learn a lot. You're going to have fun with me and uh we'll take you through that whole journey of pre-approval to keys. So, can't miss it. Look forward to seeing you. I'm the mortgage patriot Kevin Fagan on your side. Make it a great one. END OF TRANSCRIPT