Hi Sue. That is an excellent question. There are potentially HUGE advantages to paying down the interest rate and I would highly recommend it. There are several types of Buy Downs available to match the buyer's needs, 2-1 Buy Down, 3-1, Permanent Buy Down. When the rate is bought down, several things happen: Obviously, the rate is lower, payments are also lower and the income needed to qualify for a loan is also lower. For you, as a realtor, this opens up a bigger pool of people that can qualify to make a purchase who otherwise may not have qualified at the higher rate. What I would then recommend to the buyer is that they use the difference (or part of it) of their lower payments to either pay down the principal, invest it in an interest bearing account or both. This is going to help the buyer pay off their property faster and also build wealth. I would recommend, especially in this market, to get the seller to pay for the buyer's rate Buy Down, instead of lowering the price of the home. I will send you some information separately so you can see the huge, positive impact this has for seller, buyer, the market, realtors and all parties involved.
P.S. A rate Buy Down has NOTHING to do with a lender or mortgage professional making more money. Some people are just badly missinformed.