7.85% or 4.875%? What a Builder Rate Buydown Really Means for You

Real estate services provided through DeLex Realty.

You've seen the signs. Driving down Hunt Highway or out by Maricopa, there's always a giant banner with a shockingly low interest rate on it. And you think, "Wait. Is that real?"

Sometimes, yes! But let's talk about what's behind it, because the number on the sign is the frosting. You want to know what the cake is made of.

The example from my video

In one of my reels, I compared two monthly payments: one at a rate around 7.85% and one at 4.875% using a builder incentive. The difference in the monthly payment was big. Like "that's a car payment" big.

Those numbers were an example from that time. Rates change all the time, and every builder's offer is different. But the idea is still the same, and it's worth understanding.

What a buydown is, in plain English

A rate buydown is when money is paid upfront to lower your interest rate. With new builds, the builder often pays it as an incentive to help homes sell.

There are a couple of common flavors:

• Temporary buydowns. Your rate is lower for the first year or two, then goes up to the regular rate.
• Permanent buydowns. The lower rate is for the life of the loan.

These are very different! A temporary buydown can be helpful, but you need to be comfortable with the payment once it adjusts. Your lender can walk you through exactly how it works on your loan.

Five questions to ask before you get excited

Write these in your phone notes:

1. Is this rate temporary or permanent?
2. Do I have to use the builder's preferred lender to get it?
3. Does it apply to every home, or only certain lots or move-in-ready homes?
4. Could I take the incentive as closing-cost help or a price reduction instead?
5. When does the offer expire?

Sometimes the best deal isn't the lowest rate. It's the right mix for your situation. That's exactly where having your own agent helps.

Always bring your own Realtor

I'll keep saying it until I'm blue in the face (or purple, it's almost Halloween). The builder's sales team represents the builder. Your own Realtor represents you. And many builders require your agent to be registered on your first visit, so bring me along or call me before you go.

The video

Here's the reel. It's short and has numbers, so maybe grab a snack first.

Watch on Instagram: New build incentives: always bring your own Realtor

Video not loading? Watch it on Instagram here.

The bottom line

Builder incentives in Pinal County and the East Valley can genuinely save buyers money. Just get the full recipe before you take a bite. I'm happy to line up a few builders side by side for you, no pressure.

Easy question: would you rather have a lower monthly payment or more cash back at closing? There's no wrong answer, I'm just curious.

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Free First-Time Homebuyer Webinar

Thinking about buying your first home in the Phoenix metro or Pinal County? I put together a free, calm, 15-minute webinar that walks you through the whole process in plain English: budgets, pre-approval, builder incentives, offers, inspections and closing. No pressure, no sales pitch.

• Watch the webinar: lovingazhomes.com/first-time-buyers
• Prefer YouTube? Watch it on YouTube
• Grab my free buyer guide: lovingazhomes.com/first-time-buyers

Questions? Call or text me at 480-572-2159.

Tina Marie Miller, REALTOR® | Loving AZ Homes | DeLex Realty. Real estate services provided through DeLex Realty. Equal Housing Opportunity.