Builder buydown loan

Builder buydown loan

A mortgage loan on newly developed property that the builder subsidizes during the early years of the development. The builder uses cash to buydown the mortgage rate to a lower level than the prevailing market loan rate for some period of time. The typical buydown is 3% of the interest rate amount for the first year, 2% for the second year, and 1% for the third year (also referred to as a 3-2-1 buydown).
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.