Permanent rate buydown
A borrower may pay discount points at closing to obtain a lower rate, if available. Compare upfront cost with monthly savings and the time needed to recoup it.
Payment strategy
Could a rate buydown make the payment work better?
A buydown changes borrowing costs in exchange for upfront funds or a contribution. The right comparison looks at the payment relief and who pays for it.
A personal plan
Your home goal.
Your next step.
Your next step.
1Tell us what matters
2Compare the trade-offs
3Choose how to proceed
Temporary buydown
A seller or builder may contribute to a temporary payment reduction where allowed by the program and contract. Payments usually step up later to the note payment. Plan for the full payment from the start.
Compare more than the first-year payment.
Ask for the note rate, payment schedule, amount funded, total cost, and what happens to unused buydown funds if the loan is paid off or refinanced early. Availability and limits depend on program and transaction.
Check the break-even point.
For borrower-paid points, compare upfront cost with expected monthly savings. If you may move or refinance before break-even, the points may not be worthwhile.