A process that allows a borrower to obtain a lower interest rate on a mortgage by paying points to a lender. A temporary buydown will reduce the interest rate paid during the first few years of the loan. A permanent buydown reduces the interest rate over the entire life of the loan.
A payment made to reduce a borrower's monthly loan payment.
Mortgage for which the lender pledges to make a loan with a below-market interest rate to a borrower, in exchange for an interest rate subsidy. This subsidy is usually in the form of a sum of money from the homebuyer, seller, builder, or lender. PREVIOUS | | | | | | | | | | | | | | | | | | | | | NEXT
Payment to a mortgage lender in return for a lower interest rate on the loan, either for a portion of the term or for the whole term. This payment is referred to as "points", which is a percentage of the loan amount.
Funds paid to the lender by the borrower or third party to reduce the interest rate of the loan for a specified period of time.
An interest rate buydown is the temporary reduction of the note rate and resulting monthly payments a borrower pays to the lender. The shortfall between the rate on the note and initial payment made by the borrower is usually paid by a third party such as a seller or builder.
A sum of money paid upon the closing or settlement of a mortgage loan to reduce the interest rate, either temporarily or permanently, on the mortgage. See "temporary buydown".
This is a method of reducing the interest rate on a loan by making a payment to the lender from the seller, buyer or third party.
An interest rate buydown is the temporary reduction of the rate of interest or the monthly payments borrowers pay to the lender. The shortfall between the rate on the note and initial payment made by the borrower is usually paid by a third party such as a seller or builder. aps Caps are used on adjustable rate mortgages (ARMs) to limit the interest rate and/or the payment. Most ARMs have a periodic cap that is around 2% per year and a life cap of around 5% - 6% over the life of the loan. Payment-only caps sometimes create negative amortization where the principal balance of the loan increases rather than decreases over time.
A fee paid to lower the interest rate on a mortgage, the buyer, seller, or any other interested party may pay it. A permanent buydown would lower the rate for the entire term of the mortgage. A temporary buydown would lower the rate for a certain portion of the mortgage term, usually the first few years.
a fixed-rate loan where you pay extra money up front in points in exchange for a lower rate the first one or two years
an initial lump-sum payment, which allows the lender to reduce the interest rate on a mortgage loan
A payment to the lender from the seller, buyer, or third party to reduce the interest rate during the early years of a loan (typically for the first 1 to 5years of the loan).
A financing technique used to reduce the monthly payment for the home buying borrower during the initial years of ownership. Under some buydown plans, a residential developer, builder, or the seller will make subsidy payments (in form the of points) to the lender that "buydown," or lower, the effective interest rate paid by the home buyer, thus reducing monthly payments for a set period of time.
A sum of money paid to a lender at closing to reduce the borrower's out-of-pocket monthly mortgage payment; most buydowns are temporary.
A temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage.
Cash payment, usually measured in points, to a lender in order to reduce the interest rate a borrower must pay. The seller may increase the sales price to cover the cost of the buydown.
is the act of buying a lower interest rate by paying more points at the closing.
Money advanced by an individual (builder, seller, etc.) to reduce the monthly payments for a home mortgage for all or part of the term of the loan.
A financing technique of paying a lump sum of money to a lender for discount points to lower the interest rate on a fixed-rate mortgage for a period of time, lowering the monthly payments at the beginning of the mortgage.
Buydown refers to a payment made to reduce the interest rate on a loan before it settles. A temporary buydown provides lower rate and payments temporarily. A permanent buydown reduces the rate and payment for the entire term of the loan.
Money advanced by an individual (e.g. builder, seller, buyer, lender, developer) to lower monthly mortgage payments for a few years or the whole term.
A sum of money sufficient to ``buy'' or obtain a lower-than-market rate from the lender. It can be viewed as prepaid interest in exchange for lower monthly payments. It is similar to discount points on a government loan.
A temporary buydown gives a borrower a reduced monthly payment during the first few years of a home loan and is typically paid for in an initial lump sum made by the seller, lender, or borrower. A permanent buydown is paid the same way but reduces the interest rate over the entire life of a home loan.
A payment to the lender from the seller, buyer, or third party, or some of combination of these, that causes the lender to reduce the interst rate during the early years of the loan.
Money advanced by an individual (builder, seller, etc.) to reduce the monthly payments for a home mortgage either during the entire term or for an initial period of years.
An arrangement whereby the property developer or another third party provides an interest subsidy to reduce the borrower's monthly payments typically in the early years of the loan.
A 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 mortgage (deed of trust) loan. The buydown usually applies during the first one to five years of the mortgage (deed of trust) loan.
A Veteran's Admin istration loan plan available only in some new housing developments. A builder agrees to pay part of the mortgage for the first few yeas. Sellers also may create buydowns by paying lenders a predetermined amount of money so lenders will reduce their interest rates.
The process of paying additional points on a loan to reduce the interest rate. Buydowns can be temporary or permanent.
When the seller, builder or buyer pays an amount of money up front to the lender to reduce monthly payments during the first few years of a mortgage.Buydowns can occur in both fixed and adjustable rate mortgages.
A payment made to a lender in order to reduce the interest rate of a loan.
A type of loan that allows for a borrower to "buy down" their interest rate for the first few years of the mortgage. This makes the payment lower in the first years, and the cost of the buydown can be paid by the buyer, seller or lender.
A financing technique in which points are paid to the lender by the seller or builder that lowers (buys down) the effective interest rate paid by the buyer/borrower, thus reducing the amount of the monthly payment for a set period of time
With a buydown, the seller pays an amount to the lender so that the lender can give you a lower rate and lower payments, usually for an early period of the loan. For example, the interest rate may be 6% in year one, 7% in year two, and then 7.5% each year thereafter. The seller may increase the sales price to cover the cost of the buydown.
Money paid up front typically by the borrower to reduce the monthly payment amount of the mortgage. Caps Limits on the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.
When additional payment is made at closing for the purpose of reducing the interest rate, whether for a short period or the full term of the loan.
A reduction in the interest rate or monthly payments accomplished by payment of an additional fee. The reduced interest rate may hold for all or part of the loan term.
A payment to the lender from the seller, buyer or third party, creating an escrow account to subsidize a part of the payment. The reduction is usually expressed in terms of interest rate. For example, a borrower's payments on a 2-1 buydown would be figured at 2% below the note rate for the first year, and at 1% below the note rate for the second year. Payments for the remaining term of the loan would be at the note rate.
A financing technique used to reduce the monthly payments for the first few years ofa loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.
the process of paying additional points on the loan to reduce the monthly mortgage. There are typically two specific types: a Permanent Buydown, and a Temporary Buydown. In a Permanent Buydown, a sufficient amount of interest is prepaid to lower the rate permanently. In a Temporary Buydown, only a sufficient interest is paid to lower the payment for the first three years. The reason to Temporarily Buydown, a loan is to lower the current payments thereby more easily qualifying for the loan. This usually makes sense because income will usually continue to increase as the interest does. The most common Temporary Buydown is called 3-2-1, meaning three percent lower the first year, tow percent lower the second year, and one percent lower the third year.
Reduction of interest rates by a special fee.
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.
When the lender and/or the home builder subsidizes the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires.
Funds paid or set aside at closing to supplement a buyers's monthly payment. Buydowns may be temporary (for a period of time) or permanent (for the life of the loan).
The process of paying additional points on the loan to reduce the interest rate and monthly payment. There are typically two types: a Permanent Buydown, and a Temporary Buydown. In a Permanent Buydown, a sufficient amount of interest is prepaid to lowerthe rate permanently. In a Temporary Buydown, only enough interest is paid to lower the payment for the first three years. The purpose of a Temporary Buydown is to lower the current payments thereby making loan qualification easier. This usually makes sense because income will usually continue to increase. The most common Temporary Buydown is called 3-2-1, meaning three percent lower the first year, two percent lower the second year and one percent lower the third year.
A buydown is a Veterans Administration loan plan that is available only in some new housing developments and is aimed at veterans with low or modest incomes. Buydown simply means that a builder agrees to pay part of the homebuyer's mortgage for the first few years. Sellers also sometimes do interest rate buydowns to create attractive financing for buyers of their houses by paying lenders a predetermined amount of money so lenders will reduce their mortgage interest rates.
A sum of money paid to the lender at closing to reduce the borrower's out-of-pocket monthly payment. A boydown can be temporary or permanent.
Funding advanced to reduce borrower's monthly payment in the early years of the mortgage.
Usually refers to a fixed rate mortgage where the interest rate is "bought down" for a temporary period, usually one to three years. After that time and for the remainder of the term, the borrower’s payment is calculated at the note rate. In order to buy down the initial rate for the temporary payment, a lump sum is paid and held in an account used to supplement the borrower’s monthly payment. These funds usually come from the seller (or some other source) as a financial incentive to induce someone to buy their property. A "lender funded buydown" is when the lender pays the initial lump sum. They can accomplish this because the note rate on the loan (after the buydown adjustments) will be higher than the current market rate. One reason for doing this is because the borrower may get to "qualify" at the start rate and can qualify for a higher loan amount. Another reason is that a borrower may expect his earnings to go up substantially in the near future, but wants a lower payment right now.
A payment to the lender from the seller, buyer, or third party that will cause the lender to reduce the interest rate during the early years of the loan.
A subsidy (usually paid by a builder or developer) to reduce the monthly payments on a mortgage loan.
an arrangement in which a lump sum payment is made to lower the interest rate for a period of time. Buydowns are available for government loans and conventional loans. See Discount Points.
With a seller pays an amount to the lender so that the lender can give the buyer a lower rate and lower payments, usually for an early period of a loan. The seller most likely will increase the sales price to cover the cost of the buydown.
A 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 one to five years of the loan. (See also: Certificate Backed Mortgage).
amount seller pays to lender so buyer gets lower interest rate. Inflated or non-negotiable selling price covers buydown.
A fee to subsidize the mortgage by reducing the interest rate or payment during the first few years of the loan. While the payments are initially low, they will increase upon expiration of the subsidy.
Money advanced by an individual to reduce monthly payments for a specified period of time.
Allows loans to be made at less-than-market interest rates by paying front-end discounts. The interest rate is brought down for a temporary period, usually from one to three years. In order to acquire this discount, a lump sum is paid and held in an account used to supplement the borrower's monthly payment. After the discount period, the payment is calculated as the note rate.
An interest rate that is bought down to a lower rate.
Permanent - prepaid interest that brings the note rate on the loan down to a lower, permanent rate. Temporary - prepaid interest that lowers the note rate temporarily on the loan, allowing the buyer to more readily qualify and to increase payments as income grows.
Money advanced by seller or builder to reduce buyer's monthly payments on a mortgage either during the entire term of the mortgage or for the first few years.
The process of trading money for a lower mortgage rate. The borrower "buys down" the interest rate on a mortgage by paying discount points up front. It can also be a mortgage in which an initial lump-sum payment is made to temporarily reduce a borrower's monthly payments during the first few years of a mortgage. Back
A method of reducing an interest rate by increasing points or fees.
A lump sum payment made to the creditor by the borrower or by a third party to reduce the amount of some or all of the consumer's periodic payments to repay the indebtedness.
When the lender and/or the home builder subsidizes the mortgage by lowering the interest rate during the first few years of the loan. (Return to the top of the page.)
When the lender and/or the home builder subsidizes the mortgage by lowering the interest rate during the first few years of the loan. Rates do rise during the term, however the initial lower rate helps the borrower qualify for an amount they may otherwise not qualify for. This is an excellent instrument for those who anticipate the ability to pay slightly increasing payments in subsequent years.
With a buydown, the seller pays an amount to the lender so that the lender can give you a lower rate and lower payments, usually for an early period in an ARM. The seller may increase the sales price to cover the cost of the buydown. Buydowns can occur in all types of mortgages, not just ARMs.
A type of financing where the buyer or seller pays extra points (often called discount points) in return for a lower interest rate. The low-down on buydowns is that they are commonly used to make qualifying for a loan easier since they lower a loan's interest rate. There are two types of buydowns: (1) a permanent buydown that lets you pay extra points in order to get a low interest rate over the life of a loan (2) a temporary buydown is when you prepay interest in exchange for a lower rate on the first 2-3 years of a loan. Often the builder, seller or lender, all who want to make the housing more attractive to buyers, will pay for the buydown. Also, the lower starting rate makes it easier to qualify for the loan.
A temporary buydown provides the borrower with the ability to lower the interest rate on their mortgage by paying points to a lender in order to lower their monthly payments for the first few years of the loan. The points paid are used to finance the difference between the actual monthly payment and the bought down monthly payment. A permanent buydown reduces the interest rate over the entire life of the loan.
Paying a lump sum up front to reduce the interest rate on a mortgage. The reduction may be temporary or for the term of the loan.
A sum of money sufficient to buy a lower interest rate from a lender. Generally it costs 1% of the loan amount to reduce the interest rate by 1/8%.
The payment of additional points to a mortgage lender in return for a lower interest rate on the loan.
When the lender or home builder lowers the interest rate on initial payments on a loan, often for the first few years, allowing a borrower whose income is expected to increase in subsequent years to qualify for a loan they otherwise are currently not qual
The payment of extra money on a loan now so as to provide a lower interest rate over either a given period or over the life of the loan. back
A contract renegotiation to reduce either the price of a commodity, the amount sold or the amount of take-or-pay liability under the contract. Usually accompanied by monetary or other concessions made to the producer.
A buydown is a mortgage financing technique where the buyer attempts to obtain a lower interest rate for at least the first few years of the mortgage.http://dictionary.reference.com/browse/buydown "Definition of buydown", Dictionary The seller of the property usually provides payments to the mortgage lending institution, which, in turn, lowers the buyer's monthly interest rate and therefore monthly payment. This is typically done for a period of about one to five years. In a seller's market the seller might raise the purchase price to compensate for the costs of the buydown but in most markets it would not be to their advantage to use a buydown as an enticement if they are going to offset the benefit but raising the price.http://money.cnn.com/2006/11/13/real_estate/the_buy_down/index.htm?postversion=2006111316 "Homes: Slow-market savings - the 'buy-down'", CNN Money In most cases, the buydown does not even involve the seller.