How Rate Buydowns Help Homebuyers Save More

By Misty Darling

Professional service with an emphasis on guidance, planning, and dedication to my clients’ needs are my top priority.

What if one of the best ways to buy a home in today’s market was a strategy most people haven’t even heard about in years? I sat down with Bryan Zeutenhorst, Branch Manager at Envoy Mortgage, to uncover why buydowns are making a big comeback and how they could be the game-changer buyers need right now.

So, how do buydowns work? Bryan explained that the real focus should be on affordability, not just the interest rate. The question is whether the monthly payment feels comfortable, knowing there’s always the possibility of refinancing later. That’s where buydowns shine.

Right now, Envoy Mortgage offers a lender-paid buydown that lowers the interest rate by 1% at no cost to the buyer. This extra breathing room helps buyers move forward with more clarity and financial confidence.

Another option is the 2-1 buydown, usually paid by the seller. In year one, the interest rate is reduced by 2%; in year two, it’s reduced by 1%. This setup gives buyers lower payments upfront while still getting them into the home they want without waiting for rates to drop.

The cost of waiting. To help buyers better understand the risks of waiting, Bryan shared a tool on his site called the Cost of Waiting Calculator. By comparing a $320,000 home today at a 7.25% rate versus buying later at a higher price but lower rate, the numbers reveal that buyers would need over $2,000 more for a down payment and take out a $17,000 larger loan. The most noteworthy part here was the lost equity, which could exceed $21,000, and the fact that it could take 10 years to recover that loss.

Buying vs. renting. We also discussed how renting compares to buying. When you buy, you’re building equity and creating long-term financial stability. Rent prices remain high, and many people don’t realize they may already qualify for homeownership. Renting often feels easier in the short term, but it comes at the cost of missed opportunity.

Some might argue that if they are selling too, they can benefit from rising prices. But as Bryan pointed out, many sellers are also moving up, and that larger purchase will carry a higher cost. In most cases, their net equity is reduced or erased completely.

If you’re on the fence about buying, tools like buydowns and the Cost of Waiting Calculator can help you make a more informed decision. The window of opportunity may be narrower than it seems, and waiting even a year could set you back a decade financially. If you have questions or need guidance, just reach out. You can call me at (515) 414-0059 or send an email to misty@mistysold.com. I look forward to talking with you soon!