Question Details

Richard, Home Buyer in Murfreesboro, TN

if i buy down points on my loan is it good for life of the loan

Asked by Richard, Murfreesboro, TN Tue Jan 20, 2009

Help the community by answering this question:


What is the Difference Between a Temporary Buydown and a Permanent Buydown?
A permanent interest rate buydown requires paying discount points that reduce the interest rate for the life of the loan. One point is equal to .001 x Loan Amount.

For example:
A BANK MAY OFFER A 30 Year Fixed Rate:

5.5% 3.0 point
5.75% 2.0 points
6.0% 1 point
6.25% 0 points

A temporary interest rate buydown is a much greater reduction in rate and payment for the term of the buydown.

321ADVANTAGE prefers the temporary buydown:
The cost of the permanent buydown is expensive in comparison to the small difference in rate and payment it provides, especially when we take into consideration the fact that the average homeowner sells or refinances every 5 to 7 years. (60 to 84 payments).

See the charts, calculators and scenarios that demonstrate why Temporary Interest Rate Buydowns make more sense than Permanent Buydowns:

Need help structuring the transaction. We help for free!
Web Reference:
0 votes Thank Flag Link Fri Mar 6, 2009
The buydown is good until you pay the loan off. Now if you refinance this does not carry over.

If you want to get a idea of how much it cost to buydown and your differences in rate my website does this. Go to

Thanks and let me know if you have any more questions.
0 votes Thank Flag Link Tue Jan 20, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer