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Buydown |
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BuydownA payment to the lender from the seller, buyer, third party, or some combination of these, causing the lender to reduce the interest rate during the early years of a loan. The buydown is usually for the first 1 to 5 years of the loan.Buydown Similar MatchesBuilder buydown loanBuilder buydown loanA mortgage loan on newly developed property that the builder subsidizes during the early years of the development. The builder uses cash to buy down the mortgage rate to a lower level than the prevailing mortgage loan rate for some period of time. The typical mortgage is 3% of the interest rate amount for the first year, 2% for the second year, and 1% for the third year (also referred to as a 3-2-1 buydown). FNMA BuydownFNMA BuydownFNMA (Federal National Mortgage Association) accepts loans containing a buy down provision on single family residential, owner occupied properties. A prepayment (points) will buy a lower rate of interest during the first one to five years of the loan. Restrictions apply as to the amount of the buydown and rise in payment amount as the loan progresses. |
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