A buydown refers to:
A)a mortgage that starts with unusually low payments that rise over several years to a fixed payment.
B)financing made available by a builder or seller to a potential new-home buyer at well below market interest rates,often only for a short period.
C)a fixed-rate mortgage with payments that increase over a specific period.
D)a mortgage that requires the borrower to pay only interest; typically used to finance the purchase of more expensive properties.
E)a loan on which payments that equal half the regular annual interest amount are made every six months.

Question

Quizplus · Accepted Answer

A buydown is a financing arrangement where the builder or seller provides funds to the borrower to reduce their interest rate and monthly payment for a specified period. It is often used to entice buyers to purchase a property, especially in a slow market or for new construction where the builder wants to sell quickly. The interest rate is typically below market rates, and the reduced payment may only last for a few years before returning to a higher, fixed level.

A Buydown Refers To