HOW IT WORKS
This is what happens to the interest rate over the first 3 years.
Starts lower and steps up to the full rate
What is t he most common way a 2-1 buydown is funded
Seller credit
A 2-1 buydown mainly helps lower this for buyers
Monthly payment
The biggest downside buyers must understand.
Payment increases over time
Buyers must qualify at what rate?
Full (Year 3) note rate
This type of credit is often used on new construction
Builder credit
This market condition makes 2-1 buydowns especially helpful
Higher-rate market
This is NOT guaranteed, even though buyers often hope for it
A refinance
The year the loan reaches the permanent payment.
Year 3
True or False: The lender pays for the buydown
FALSE
Instead of cutting the price, a 2-1 buydown provides this
Payment solution
This type of buyer is usually NOT a good fit for a 2-1 buydown
Buyer who can’t afford the full payment long-term