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3/1 or 2/1 or 1/1 Temporary Interest Rate Buy-Down (New Home Purchase)
A temporary interest rate buy-down loan, whether it's a 3/1, 2/1, or 1/1, usually features a fixed-rate mortgage with an initial period in which the interest rate is temporarily reduced. This reduction is often made possible through a concession provided by the home seller. The purpose of these types of loans is to offer borrowers a lower initial interest rate, making home-ownership more affordable in the early years of the mortgage.
Here's an illustrative comparison chart between a Price Reduction, Permanent Interest Rate Buy-Down and 2/1 buy Temporary Interest Rate Buy-Down. Please be aware that the example below is for illustrative purposes only and does not reflect current interest rates nor does this reflect a real life scenario that occurred.
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