Finance
A '2-1 buydown' mortgage in Arizona temporarily reduces the borrower's interest rate by:
A2% in year 1 and 1% in year 2, returning to the full note rate in year 3✓ Correct
B1% in year 1 and 2% in year 2, then the full rate from year 3 on
C2% for the first two years, then 1% reduction permanently
D2% for all years of the loan term
Explanation
A 2-1 buydown temporarily reduces the interest rate by 2% below the note rate in year 1 and 1% below in year 2, with the full note rate applying from year 3 onward. It is funded by prepaid interest paid at closing, often by the seller.
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