Let the seller lower your rate.

A temporary buy-down uses a credit from the seller at closing to temporarily or permanently reduce your mortgage interest rate, lowering your monthly payment, commonly structured as a 2-1 or 1-0 temporary buydown. It doesn't cost the buyer anything extra out of pocket since the seller funds the reduction.

A temporary buydown is most commonly funded by the seller (as a concession to help close the sale) or the builder on new construction, though a lender or the buyer can also fund it in some cases. The funds are typically placed in an escrow account that pays the difference between the reduced and full payment each month.

A temporary buydown lowers the payment for a limited period (like 1 to 3 years) and then steps up to the full note-rate payment; the interest rate never actually changes. A permanent buydown (paying discount points) actually lowers the interest rate for the life of the loan.

Once the buydown period ends, the payment steps up to the full payment based on the original note rate for the remainder of the loan term. The rate itself never changed, so it's important to budget for that higher payment from day one.

Yes. Many borrowers use a temporary buydown as a bridge, planning to refinance if rates drop before the buydown period ends. If a refinance happens, any unused buydown funds are typically applied to the payoff or returned per the loan's terms. Ask us for specifics.