PeterUK_IHB
New member
<p>Could someone please explain what this means?</p>
<p>Thank you. </p>
<p>Thank you. </p>
What is a Loan Buy Down Incentive ?
- Thread starter PeterUK_IHB
- Start date
NEW -> Contingent Buyer Assistance Program
xsocal land merchant_IHB
New member
PeterUK
A loan buydown incentive works in one of 2 ways:
1. A seller pays a certain amount to reduce the interest rate for the buyer for the full period of the loan. Example: rate is 6.50% the seller pays upfront to reduce the rate to 6%.
2. 3, 2, 1 buydown: seller pays a fixed amount and reduces the interest rate by 3% year 1, 2% year two, and 1% year 3. year 4 on rate goes to whatever it was written for. Example: rate is 6.5% then year 1 it is 3.5%, year 2 it is 4.5%, year 3 it is 5.5% and year 4 forward it is 6.5%.
The cost varies with the market.
I hope this helps explain it.
A loan buydown incentive works in one of 2 ways:
1. A seller pays a certain amount to reduce the interest rate for the buyer for the full period of the loan. Example: rate is 6.50% the seller pays upfront to reduce the rate to 6%.
2. 3, 2, 1 buydown: seller pays a fixed amount and reduces the interest rate by 3% year 1, 2% year two, and 1% year 3. year 4 on rate goes to whatever it was written for. Example: rate is 6.5% then year 1 it is 3.5%, year 2 it is 4.5%, year 3 it is 5.5% and year 4 forward it is 6.5%.
The cost varies with the market.
I hope this helps explain it.
PeterUK_IHB
New member
Thank You xsocal, that explains it very well.....