Temporary Buydown

First Federal Bank : August 8, 2024 5:01:26 PM EDT

Homeowners Mortgages / Home Equity
Temporary Buydown

Buydowns: A Strategy for Lowering Interest Rates


1. Upfront Payment: Another party pays an upfront payment at closing.

2. Interest Rate Reduction: In exchange for the upfront payment, First Federal Bank will lower the interest rate on the mortgage for a specified period. We do 3-2-1 buydowns, 2-1 buydowns, and 1-0 buydowns.

A common buydown might be a 2-1 buydown, where the interest rate is reduced by 2% in the first year and by 1% in the second year before reverting to the original rate from the third year onward. The lowering of the rate is temporary.

3. Temporary Benefit: The reduced interest rate provides you with lower monthly mortgage payments during the initial years of the loan. This can make homeownership more affordable in the short term.
The content on this site is intended for informational purposes only and should not be considered accounting, legal, tax, or financial advice. First Federal Bank recommends that customers conduct their own research and consult with professional legal and financial advisors before making any financial decisions. Links to third-party websites may be provided for your convenience; however, First Federal Bank does not guarantee the reliability, accuracy, or safety of the information, products, or services offered on these external sites. We are not liable for any damages resulting from the use of these links, and we do not investigate, verify, or endorse the content or opinions expressed on any third-party sites. First Federal Bank | Equal Housing Lender | NMLS # 408902
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