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See what a 2-1 buydown does to your first two years of payments — and what the buydown costs.
A 2-1 buydown lowers your rate by 2% in year 1 and 1% in year 2, then returns to the note rate. The cost (often paid by the seller or lender) equals the total payment savings over the two years. Principal & interest only.
A 2-1 buydown temporarily reduces your interest rate — 2% lower in year one, 1% lower in year two — before settling at the full note rate in year three. The cost equals the two years of payment savings and is often negotiated as a seller or lender credit. It's a way to ease into payments or use seller concessions. Read what is a 2-1 buydown and is a buydown worth it.
A temporary rate reduction: 2% below your note rate in year one, 1% below in year two, then the full rate after. It lowers your early payments.
Often the seller or builder as a concession, sometimes the lender. The cost equals the total payment savings over the two years.
It depends on how long you'll keep the loan. Short term, a 2-1 buydown helps; long term, permanent points may win. We'll compare both.
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