Finance
What is a 'buydown' mortgage in Idaho real estate financing?
AA mortgage where the borrower pays down principal faster
BA financing arrangement where upfront points are paid to reduce the interest rate for a period or for the loan life✓ Correct
CA loan where the lender buys down the property value
DA state program to help buyers purchase foreclosures
Explanation
A buydown involves paying discount points upfront to reduce the mortgage interest rate. A temporary buydown (e.
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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.
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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Math Concepts
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