What is a 3/2/1 buydown? How can this help me?

One of the main advantages of a buydown mortgage over an Option ARM is that there is no deferred interest incurred during the years in which you are paying a lower rate.

There are many different types of buydowns, but they all work the same way. A couple of the variations are 3-2-1, 2-1, 1-1, etc. With these types of loan you will be paying a reduced rate during the initial years of the mortgage.

Basically these work as a step system, usually in 1 year increments, Example the 1st year 4.5%, 2nd year 5.5%, and the 3rd year 6.5%

 

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