A Buy Down Mortgage

A buy down mortgage is  one of several types of mortgage loans that offer low initial payments. Throughout the early years the loan is subsidized by the lender, who pays a part of the indenture payments that would otherwise be paid solely by the borrower.

A buy down option lowers the payment amount and opens the possibility of qualifying for a higher priced home. Under a normal buy-down, a homebuyer's loan payments results in lower payments, with the  2-1  or  3-2-1 being the noted ones. The significance of this is that the mortgage payment in the years 1,  2 and 3 are calculated at rates 3 %, 2 % and 1 %, and  the same with the 2-1 type.
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A buydown  may lessen your re-payments for the intermediate time, but you may need to weight the initial benefits with the long term time of paying off your closing costs. This mortgage loan payment type can  reduce the amount paid by the borrower on a monthly basis but the payments will increase as the period of reduction ends. When you participate in a buy-down, you must make a bulk sum payment at the mortgage closing. If you have come into  a large sum of money you may want to consider a buy down mortgage type.


Maby you have decided that another type of mortgage loan payment would be best suited for your situation. No matter what you need to keep in mind  the amount you can initially pay with the amount you can pay monthly. Ultimately the choice you make will have an impact on your decision to choose a buy down mortgage with lower payment options or go with another type.