A temporary buydown lowers your mortgage payment during the first year or two of your loan, then gradually increases until it settles into your normal fixed rate. It’s a way to ease into your new mortgage payment instead of starting at the full amount right away, and it doesn’t change your loan’s long-term cost.
Lower payments during the first year or two, when moving costs and new-home expenses add up
After the discount period, your rate becomes a standard fixed rate, no surprises
If you sell or refinance during the discount period, any unused buydown funds come back to you
A temporary buydown can be a great way to ease into homeownership, especially if you expect your income to grow or just want breathing room in your first year. It’s usually paired with a seller credit as part of the purchase negotiation.
Every situation is different; a loan officer can walk you through whether this fits your specific purchase.
No, it doesn’t increase your overall loan costs. It simply lowers your payment temporarily, funded through a negotiated credit rather than an added expense.
It’s typically funded through a seller credit as part of the purchase negotiation, not paid for directly by the buyer.
Your mortgage becomes a standard fixed-rate loan at your normal rate — the buydown is only for the first year or two.
Any unused buydown funds are refunded to you.
Every purchase and every seller negotiation is different. Talk to a MegaStar loan officer to see if a temporary buydown makes sense for your situation.
If you have questions or need assistance with your 1098 form, please send your question to servicing@megastarfinancial.com
Publisher: HomeLight
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