BUYDOWN MORTGAGE

A temporary Buydown is the type of loan with an initially discounted interest rate which gradually increases to an agreed-upon fixed rate, usually within one to three years. An initially discounted rate allows you to qualify for more houses with the same income and gives you the advantage of lower initial monthly payments for the first years of the loan when extra money may be needed for furnishings or home improvements. In order to reduce your monthly payments during the first few years of a mortgage you make an initial lump sum payment to the lender. If you do not have the cash to pay for the Buydown, the lender can pay this fee if you agree on a slightly higher interest rate.