For Home Loan Seekers, a mortgage buydown is more advantageous than choosing, say, an adjustable loan with a payment option that allows for negative amortization like an Option ARM. That's because with mortgage buydown programs, your mortgage payment always includes principal and interest. This means every time you make a payment, your mortgage balance grows smaller instead of bigger.
Basics of Today's Popular Mortgage Buydowns
Popular mortgage buydowns work like this.
- Payments are reduced and figured on a lower interest rate over a specific term.
- The difference between the "real" note rate and the lowered interest rate is paid in cash by the seller or the buyer.
- Think of it like a subsidy. It's like socking away $1200 in the bank and withdrawing $100 every month for 12 months to help make your mortgage payment.
For Home Loan Seekers, a mortgage buydown is more advantageous than choosing, say, an adjustable loan with a payment option that allows for negative amortization like an Option ARM. That's because with mortgage buydown programs, your mortgage payment always includes principal and interest. This means every time you make a payment, your mortgage balance grows smaller instead of bigger.
Basics of Today's Popular Mortgage Buydowns
Popular mortgage buydowns work like this.
- Payments are reduced and figured on a lower interest rate over a specific term.
- The difference between the "real" note rate and the lowered interest rate is paid in cash by the seller or the buyer.
- Think of it like a subsidy. It's like socking away $1200 in the bank and withdrawing $100 every month for 12 months to help make your mortgage payment.