FAQ
Mortgage Rate Buydowns Explained: Temporary vs. Permanent Buydowns
A rate buydown reduces your mortgage interest rate, either temporarily (2-1, 1-0 buydown) or permanently (discount points). Buydowns are often seller-funded in buyer's markets.
Details
The Full Answer
- Temporary buydown (2-1): rate 2% lower in year 1, 1% lower in year 2, normal from year 3
- Temporary buydown (1-0): rate 1% lower in year 1, normal from year 2
- Permanent buydown: pay points at closing to reduce rate for life of loan
- 1 point = 1% of loan amount, typically reduces rate by 0.25%
- Seller-funded: seller pays for the buydown as a concession
CTC's Role
How CTC Processing Handles This
CTC Processing reviews rate buydown terms on every file and ensures the buydown escrow account is correctly set up at closing. Seller-funded buydowns require specific documentation in the purchase contract and closing disclosure.
Have more questions?
CTC Processing works with Colorado loan officers. Call 970-222-2615 or email ctcprocessingllc@gmail.com.
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