What is a mortgage “buy down”?

With rising mortgage interest rates, “buy-downs” are the new buzz word. A “buy down” either temporarily or permanently reduces the interest rate on a mortgage loan. With the local real estate market cooling down, it’s not unusual to see a Seller agree to actually pay for a buy-down to help sweeten the deal for a potential home buyer. It can actually be a “win-win” for both buyer and seller as the buyer receives a lower mortgage payment and the contribution paid by the seller may be less than what a price reduction might be. [Read more…]