Finance
An interest rate buydown at closing reduces the borrower's interest rate by:
AThe lender paying discount points to FNMA
BThe buyer or seller paying discount points to the lender upfront to lower the rate✓ Correct
CThe government subsidizing a portion of the rate
DApplying property equity to reduce the rate
Explanation
A buydown involves paying discount points upfront (each point = 1% of loan) to reduce the interest rate on the mortgage, lowering monthly payments over the life of the loan.
People Also Study
Related Georgia Questions
- A '2-1 buydown' temporarily reduces the mortgage interest rate by:Finance
- A borrower pays 2 points on a $320,000 loan. What is the dollar cost of the points?Real Estate Math
- A listing agreement in Georgia is a contract between:Contracts
- Under GREC rules, a broker who receives earnest money must deposit it into a trust account within:Georgia License Law
- A mortgage has a remaining balance of $185,000. Monthly P&I payment is $1,200. The interest portion of the next payment at 6% annual rate is:Real Estate Math
- A 30-year mortgage for $200,000 at 6% per year has a monthly payment of approximately $1,199. Over the life of the loan, the total amount paid is approximately:Real Estate Math
- A borrower qualifies for a maximum monthly payment of $1,800. If the loan factor for a 30-year mortgage at 6.5% is $6.32 per $1,000, what is the maximum loan amount (rounded to nearest $1,000)?Real Estate Math
- A Georgia buyer takes out a $240,000 mortgage at a 7% fixed rate, fully amortized over 30 years. The monthly payment factor at 7% for 30 years is $6.65 per $1,000. What is the approximate monthly P&I payment?Finance
Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
Study This Topic
Practice More Georgia Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Georgia Quiz →