Rate Buy Downs - EXPLAINED

Today, let's demystify the world of mortgage rate buydowns. Think of a rate buydown as a sale on your mortgage interest rate – who doesn't love a good deal, right? Let's break down some popular types: the 3-2-1, 2-1, and 1-0 buydowns. Imagine a 3-2-1 buydown as a gentle step down; your interest rate decreases each year for the first three years (3% less in the first year, 2% in the second, 1% in the third) before settling at the original rate. A 2-1 buydown gives you a break for the first two years, while a 1-0 buydown offers a one-year discount. Now, there's also the option of a permanent rate buydown. It's like locking in a sale price for good, but it'll cost you more upfront – think of it as paying for future savings. And here's a cool tip: Many lenders offer one free refinance, which is a neat trick to save even more. If you've gone for a buydown and the rates dip later, this freebie lets you refinance without extra costs, keeping your wallet happy. Clever, right? So, whether you're buying a new home or looking to save on your current mortgage, rate buydowns can be a fantastic strategy. Happy house hunting and saving!"

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