What Is an EPBB and How Does It Work?
Did you know you could save money on your mortgage by getting an expected performance-based buydown (EPBB)?
An EPBB is a type of mortgage buydown where the buyer pays an upfront fee to the lender to lower their interest rate for the life of the loan.
The expected performance-based part means that if the home meets or exceeds certain energy efficiency standards, the buyer will receive a refund on part of their upfront fee.
For example, let’s say you take out a 30-year $250,000 mortgage with a four percent interest rate and an expected performance-based buydown of two percent.
This means that you would pay an upfront fee of $5,000 to the lender in order to lower your interest rate to two percent for the life of the loan.
If your home meets or exceeds the energy efficiency standards, you would receive a refund of $1,000 at the end of the loan.
In order to qualify for an EPBB, you must first have a home energy assessment to determine whether or not your home qualifies.
If you do not meet the standards, you will not receive the refund, but you will still benefit from the lower interest rate.
EPBBs are a great way to save money on your mortgage and make your home more energy-efficient.
Who Can Benefit From an EPBB?
Any buyer who wants to lower their interest rate and monthly payments can benefit from an EPBB.
However, this type of buydown is especially beneficial for buyers looking to purchase an energy-efficient home.
Not only will you save money on your monthly payments, but you may also become eligible for a refund at the end of the loan.
How Can You Benefit From an EPBB?
An expected performance-based buydown (EPBB) is a great way to save money on your mortgage and make your home more energy-efficient.
If you are looking to purchase an energy-efficient home, an EPBB can help you save money on the home’s purchase price.
How Can You Get an EPBB?
If you are interested in getting an EPBB, the first step is to find a lender who offers this type of buydown.
Not all lenders offer EPBBs, so do your research and compare different options. Once you have found a lender, you will need a home energy assessment to determine if your home qualifies.
If you meet the standards, you can lower your interest rate and enjoy the benefits of an EPBB.
What Are the Key Features of an EPBB?
There are a few key features that you should look for when shopping for an expected performance-based buydown:
- The upfront fee should be lower than the expected refund. This will ensure that you come out ahead even if your home does not meet the energy efficiency standards
- The interest rate reduction should be significant. A small reduction may not be worth the upfront fee
- The loan should have a fixed interest rate. This will protect you from rising interest rates
When shopping for an EPBB, keep these key features in mind to get the best deal possible.
The Bottom Line
An expected performance-based buydown is a great way to save money on your mortgage and make your home more energy-efficient.
If you are looking to purchase an energy-efficient home, an EPBB can help you save money on your monthly payments and the purchase price of the home.
When shopping for an EPBB, keep key features in mind to get the best deal possible.
FAQs
1. What is an expected performance-based buydown?
An expected performance-based buydown (EPBB) is a type of mortgage in which the buyer pays an upfront fee to lower their interest rate. If the home meets or exceeds certain energy efficiency standards, the buyer will receive a refund on the part of their upfront fee.
2. How can I benefit from an EPBB?
You have the potential to benefit from an EPBB in two ways: through lower monthly payments and/or a refund of part of your upfront fee. An EPBB can help you save money on your monthly payments and the purchase price of the home if the home meets energy efficiency standards.
3. How can I get an EPBB?
You can get an EPBB by finding a lender who offers this type of buydown and having a home energy assessment to determine if your home qualifies. Not all lenders offer EPBBs, so do your research and compare different options.
4. What are the key features of an EPBB?
The few key features to look for: the upfront fee should be lower than the expected refund, the interest rate reduction should be significant, and the loan should have a fixed interest rate
5. Who is eligible for an EPBB?
To be eligible for an EPBB, you must look to purchase an energy-efficient home. The home must also meet certain energy efficiency standards to qualify for the buydown. You will also need to find a lender who offers this type of mortgage. Not all lenders offer EPBBs, so do your research and compare different options.
