Finance
A buydown seller concession in Indiana is most commonly offered when:
AThe seller cannot reduce the price
BThe seller offers to pay points to temporarily reduce the buyer's mortgage rate, making the home more affordable✓ Correct
CThe buyer has excellent credit
DThe property is in a hot market
Explanation
Temporary buydowns (funded by seller concessions) are commonly used in high-interest-rate environments to help buyers afford the payment in the early years of the loan. The seller pays points to buy down the rate for 1–3 years.
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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.
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.
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