Mortgage Buydowns – How to Buy Down a Mortgage
Mortgage buydowns — what is that? You’ve probably heard the term before, but if you’re like most people, it might not make a lot of sense to you. In part, the reason it may sound confusing is because a mortgage buydown rarely results in a permanent lower monthly payment nowadays; it’s only temporary. Mortgage Buydowns Do Not Involve Negative Amortization For many borrowers, a mortgage buydown is more advantageous than choosing, say, an adjustable loan with a payment option that allows for negative amortization like an Option ARM. That’s because with mortgage buydown programs, your mortgage payment always includes principal and interest. This means every time you make a payment, your mortgage balance grows smaller instead of bigger. Basics of Today’s Popular Mortgage Buydowns Popular mortgage buydowns work like this.
