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Company Loan Type APR Est. Pmt.

How does a 2-1 buydown work?

Posted on: 13th Feb, 2007 02:51 pm
What, if any, kinds of fees are involved?
Sometimes lenders allow borrowers to buy down the interest rate on their mortgage. In a 2-1 buy down you as a borrower can be allowed to reduce the initial rate on your mortgage by 2% in the 1st year & by 1% next year. After that the rate will remain same for the rest of the term of your mortgage as was fixed at the beginning. You will be required to pay a fee in the form of discount points to buy down the rate. It’s one type of temporary buy down.
Posted on: 13th Feb, 2007 06:17 pm
Hi Chris,

Welcome to Mortgagefit discussion board.

Let me give you an example to make it clearer for you.

Suppose the current market rate for a FRM is 7.5%, the buy down results in rate of 5.5% in the 1st year and 6.5% the 2nd year. After that it goes back to 7.5% for the rest of the term of the loan.

You can go through the following page to read the other details of a buy down mortgage: http://www.mortgagefit.com/buy-mortgage.html

Thanks
Blue
Posted on: 13th Feb, 2007 06:29 pm
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