Mortgage Strategy
A temporary buydown can make the first few years of a new mortgage payment easier to swallow. The payment relief is temporary, so the full plan matters just as much as the first-year savings.
A 1-0 buydown reduces the effective rate for the first year. A 2-1 reduces it for the first two years, and a 3-2-1 may reduce it for three years. The payment increases according to the schedule until it reaches the full note-rate payment.
The buydown account is typically funded by the seller, builder, or another permitted party. Borrower-paid temporary buydowns may not be allowed, and program eligibility varies.
The lender generally qualifies the borrower using the full note-rate payment, not the temporarily reduced payment. That helps confirm the mortgage remains affordable after the buydown period ends.
When seller or builder concessions are available, a temporary buydown may provide more useful short-term relief than leaving eligible funds unused. Compare it with permanent points, closing-cost credits, and price reductions before deciding.
The right choice depends on the cost, monthly savings, time horizon, loan program, and likelihood of refinancing or selling. Sometimes a little temporary relief makes the move much more comfortable.
Written by Marta Lillard
Mortgage Broker · First Coast Mortgage Funding · NMLS #879436 · Licensed in Florida and Georgia
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