2/1 Buydown

This illustrates how the home may be more marketable by offering financing concessions to the buyer rather than lowering the price. This is a fixed rate mortgage with the buyer qualifying at the note rate. The seller would be pre-paying the interest in advance. The buyer’s first year payment would be based on an interest rate 2% lower than the note rate. The second year’s payment would be based on an interest rate of 1% lower than the note rate. The remainder of the payments is at the note rate.