Glossary
Buydown
An upfront fee paid to reduce the note rate, either temporarily (2-1 buydown) or for the life of the loan (permanent buydown).
A 2-1 temporary buydown reduces the rate by 2% in year 1 and 1% in year 2, returning to the note rate in year 3. Permanent buydowns reduce the rate for the life of the loan.
The buydown calculator computes the breakeven month — the point at which monthly savings recoup the buydown cost. Borrowers expecting to keep the loan past breakeven benefit; those expecting to refinance or sell earlier do not.