Williamson County

Round Rock Mortgage Broker: Rate Buydowns and Seller Concessions

Round Rock has enough inventory and enough builder activity that seller and builder concessions are a normal part of negotiation here rather than an unusual concession extracted from a reluctant seller.

Which makes it worth knowing exactly what those dollars can buy. The same $12,000 credit can be spent three different ways, and the right choice depends on how long you expect to hold the loan — a question most buyers are never asked.

Temporary buydowns, and what actually happens

A temporary buydown reduces your interest rate for the first years of the loan, then steps back up to the note rate.

The common structures:

2-1 buydown. Year one at 2% below the note rate, year two at 1% below, year three onward at the note rate.

3-2-1 buydown. Three years of steps — 3% below, then 2%, then 1%, then the note rate.

1-0 buydown. A single year at 1% below.

Two things about how this is funded, and both matter:

The money is deposited into an escrow account at closing. It is not a rate change. Your loan is a note-rate loan from day one; the escrow account makes up the difference each month until it is exhausted. The lender is made whole every month.

It is almost always paid by the seller or the builder, not by you. Paying for your own temporary buydown is rarely sensible — you would be handing over cash today to lower payments that return to full in a couple of years.

The part that catches people

You qualify at the note rate, not the bought-down rate. Every major program underwrites the full payment. A 2-1 buydown does not increase how much house you can buy — it lowers your payment while the escrow lasts.

That is worth stating clearly because it is frequently misunderstood, sometimes by people selling the idea. If you cannot qualify at the note rate, a temporary buydown does not fix it.

The payment does go up. In year three you are paying the full note payment, and your income needs to have grown or your budget needs to absorb it. This is a genuinely reasonable bet for someone early in a career with a rising income. It is a poor bet for someone on a fixed income.

If you refinance or sell early, unused escrow funds are generally credited — to the loan payoff, typically. The money is not forfeited to the lender.

Permanent buydowns, which are often the better trade

A permanent buydown — discount points — lowers the rate for the entire life of the loan. You pay a fee at closing, quoted as a percentage of the loan amount, and the rate drops.

The comparison against a temporary buydown comes down to hold period.

A temporary buydown concentrates the entire benefit into the first two or three years. A permanent buydown spreads a smaller monthly benefit across thirty. Seller money spent on points buys less relief now and more relief later.

The breakeven calculation is the whole decision. Divide the cost of the points by the monthly payment savings to get the number of months to recover the cost. Hold past that point and the points win. Sell or refinance before it and they do not.

Two practical notes:

A permanent buydown lowers your qualifying payment, because the note rate itself is lower. Unlike a temporary buydown, this one does affect what you can afford.

Points are generally deductible as mortgage interest where you itemize, subject to the rules on how they are paid and the loan's purpose — worth a word with your tax preparer rather than assuming.

There is a third option that is frequently the right one and rarely discussed: take the credit as closing costs instead. If you expect to refinance within a couple of years, or you are short on cash to close, applying concessions to prepaids and closing costs can simply be worth more than any rate structure.

Seller concession limits

Concessions are capped, and the cap depends on the program and on how much you put down. Exceeding it does not void the deal — the excess is simply disallowed, which wastes negotiating leverage you could have spent on price.

The general structure:

Conventional, primary residence. The limit scales with down payment — more down, more concessions allowed. At the lowest down payments the cap is tightest.

Conventional, investment property. A notably lower cap than for a primary residence, regardless of down payment.

FHA. A single cap that does not vary with down payment.

VA. Concessions are capped, and separately the VA treats certain seller-paid items differently from others — some count against the cap, some do not.

Concessions can only pay actual costs. They cover closing costs, prepaids, escrows and buydown funds. They cannot be handed to you as cash, and unused concession money does not come back to you — it reverts to the seller. Ask for what you will actually use.

The exact limits move, and they differ by occupancy and program, so the useful step is to tell us the structure you are considering before you write the offer. Negotiating $15,000 in concessions when your program allows $9,000 leaves real money unclaimed.

Williamson County taxes

Combined rates in Round Rock generally run in the 1.9% to 2.4% range — City of Round Rock, Williamson County, Austin Community College, and Round Rock ISD — plus any MUD or PID assessment where one applies.

Two local specifics:

Round Rock ISD extends well beyond the city, including into north Austin and unincorporated Williamson County. A Round Rock ISD address is not necessarily a City of Round Rock address, and the city line changes the municipal rate.

A small portion of the city extends into Travis County, which changes the county rate and the appraisal district. Verify the parcel with the Williamson Central Appraisal District or Travis Central Appraisal District as applicable.

A sale resets the appraised value and the seller's exemptions end at closing. File your homestead exemption the year you buy — the 10% annual cap on homestead appraisal increases is worth real money in a county that has appreciated as steadily as Williamson.

Where people buy

Old Town Round Rock around the original settlement holds the oldest stock and the most walkable part of the city.

Forest Creek and Stone Oak carry established 1990s development on the east side.

Teravista, straddling the Georgetown line, is a large master-planned community with a golf course.

Paloma Lake and Vista Oaks on the north and west sides hold newer construction, and are the areas most likely to sit inside a district with an assessment.

Behrens Ranch and Sendero Springs carry the 2000s middle of the market.

Neighboring Cedar Park, Hutto, Pflugerville and Georgetown each carry their own rates and districts and are worth comparing parcel by parcel.

The city

Round Rock takes its name from a round anvil-shaped limestone rock in the bed of Brushy Creek, which marked the low-water wagon crossing used by cattle drives on the Chisholm Trail. The rock is still there, with a historical marker beside it.

The town's other claim to nineteenth-century fame is the 1878 shootout in which the outlaw Sam Bass was mortally wounded by Texas Rangers after a botched bank robbery attempt; he is buried in the old Round Rock Cemetery.

Dell Technologies was founded in Austin and moved its headquarters to Round Rock in the 1990s, and the company's presence reshaped the city's growth more than anything since the railroad.

Dell Diamond hosts the Round Rock Express, the Triple-A affiliate of the Texas Rangers, and Old Settlers Park around it is one of the largest municipal parks in Central Texas, with an extensive tournament sports complex.

Kalahari Resorts opened one of the largest indoor waterparks in the country here, and Round Rock Donuts has been operating on East Liberty since 1926.

Not sure which fits? Compare every loan program we place.

Frequently asked questions

What is a 2-1 buydown? A temporary rate reduction — 2% below the note rate in year one, 1% below in year two, then the full note rate from year three. It is funded by money placed in escrow at closing, almost always by the seller or builder.

Does a buydown help me qualify for more? A temporary buydown does not. You qualify at the note rate regardless. A permanent buydown does, because it lowers the note rate itself.

Who pays for a temporary buydown? Usually the seller or builder as a concession. Paying for your own temporary buydown rarely makes sense, since you would be spending cash now for a benefit that expires.

What happens if I sell or refinance during the buydown? Unused escrow funds are generally credited toward the loan payoff. The money is not forfeited to the lender.

Is it better to buy the rate down permanently or temporarily? It depends on how long you hold. A temporary buydown concentrates the benefit in the first years; permanent points spread a smaller benefit over the life of the loan. Calculate the breakeven on the points and compare it against your expected hold.

How much can a seller contribute? It is capped by program and occupancy, and on conventional loans the cap scales with your down payment. FHA and VA have their own limits. Concessions can only pay real costs — they cannot be given to you as cash, and unused amounts revert to the seller.

What are property taxes in Round Rock, TX? Combined rates generally run about 1.9% to 2.4% plus any district assessment. Note that Round Rock ISD extends beyond the city limits, and a small part of the city is in Travis County. Verify with the Williamson or Travis appraisal district.

Tell us the structure before you write the offer

Concessions are the one part of a Texas purchase where a conversation beforehand routinely changes the outcome by thousands of dollars.

Give us the price, the program and how long you plan to keep the loan, and we will tell you exactly what to ask for.

Start your application · Run the numbers · Call 737-347-1314

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