MP] A reduction in the mortgage payment made by a homebuyer in the early years of the loan in exchange for an upfront cash deposit provided by the buyer, the seller, or both.
a reduction in the interest rate you actually pay on your loan for a stated period of time
(or 1-2-3- buydown) When an interested party (buyer or seller or lender) subsidized the mortgage by lowering the interest rate during the first few years of the loan. This lower interest rate makes it easier for the borrower(s) to qualify for the loan, but the payments typically increase as the subsidy expires.
Money paid at closing to temporarily reduce the interest rate for the first and second year of the mortgage.
A loan on which the interest rate has been "bought down" for a temporary period of time at the beginning of the loan by escrowing funds at the time of closing, which will be applied to the total monthly mortgage payment as each becomes due. See Buy Down.
Use of a subsidy to obtain lower payments during the first one to three years of the mortgage, usually paid for by either the lender or homebuilder. The most common temporary buydown is the 2/1, which lowers the payments by 2% interest in the first year and 1% in the second year. This term is often used to refer to paying points to lower the interest rate over the entire life of the loan.
A reduction in the mortgage payment in the early years of the loan in exchange for an upfront cash payment provided by the home buyer, the seller, or both. As an illustration, a 2-1 buydown on an 8% loan results in a payment in year 1 calculated at 6%, in year two the payment is calculated at 7%, and in year 3 and thereafter it is calculated at 8%. The upfront cash payment must be large enough to cover the difference between the reduced payments made in the first two years by the borrower and the regular payment calculated at 8% received by the lender.
An option offered by many lenders which offsets lower payments over the first one or two years of the loan by establishing a subsidy account with buyer, seller or investor funds.