What are Buy-downs and Discount Points?

A buydown is a way to lower your interest rate on your mortgage. You can get this by paying additional point on your mortgage. A point is a one percent of your mortgage total. The mortgage buyer always has the option to pay as many points as they want. Every increasing point will lower your mortgage rate a certain level.

Buy-Downs The payment of additional point in return for a lower mortgage rates Discount mortgage points Each discount point equals one percent of your mortgage amount

Temporary buydowns mortgages are also available. For a small percentage fee, temporary buydowns mortgages simply lower the interest rates for the first years of the mortgage. They are used to help qualify for a higher mortgage amount, because they can qualify at the first year's rate, not the higher mortgage rate.