buydown
Prepaid interest discount
A buydown is a mortgage financing arrangement where upfront payment—by the buyer, seller, or builder—reduces the interest rate, typically for the first few years of the loan.
A 2-1 buydown lowers the rate by two percentage points the first year and one point the second before reverting to the permanent rate.
Buydowns make monthly payments more affordable initially, often used as incentives in new home sales.
Units of tally
- lenderOne who loans money
- borrowerOne who takes temporarily
- fixed-rateInterest that stays constant
- adjustable-rateRate that changes periodically
underwriting · amortization · escrow · prepayment · refinancing · principal · qualification · debt-to-income
Bestow or award money
- assistanceSupport or aid given
- incentiveReward encouraging action
- affordabilityState of being purchasable
- government-backedSupported by public authority
FHA · concession · credit · allowance
Proposal to provide
- dealAgreement or distribution
- concessionYielding a point
- bargainingNegotiating mutually acceptable terms
- contractEnforceable written agreement
points
Units of tally
- lenderOne who loans money
- borrowerOne who takes temporarily
- fixed-rateInterest that stays constant
adjustable-rate · underwriting · amortization · escrow · prepayment · refinancing · principal · qualification · debt-to-income · creditworthiness
grant
Bestow or award money
- assistanceSupport or aid given
- incentiveReward encouraging action
- affordabilityState of being purchasable
government-backed · FHA · concession · credit · allowance
offer
Proposal to provide
- dealAgreement or distribution
- concessionYielding a point
- bargainingNegotiating mutually acceptable terms
affordability
State of being purchasable