Buydown Mortgage

In certain cases, a Ross Mortgage representative may suggest a buydown mortgage, a unique type of loan that may offer lower interest rates and payments.

A buydown mortgage is available in two different categories: a temporary buydown and a permanent buydown.

A temporary buydown mortgage is best suited for individuals who anticipate an increase in income in the future and offers a lower initial interest rate for the first several years of the loan. The temporary buydown interest rate will increase, at a predetermined level annually, for four years. As an example, a mortgage might start with a 3% interest rate, which would increase by 1% each year until it reached 7% in the fourth year. After the fourth year, the interest rate and monthly payments would stay the same for the remainder of the loan.

A permanent buydown mortgage also offers a lower interest rate, one that is set based on an initial down payment that is larger than with more conventional loans. That rate stays fixed and is set based on the amount of the down payment. In some cases that payment is made by the seller of the home in order to incentivize the potential buyer to expedite the purchase.

To learn more about the details of a buydown mortgage, contact a Ross Mortgage representative.