Finance
What is a 'buydown' in mortgage financing and how does it benefit a Nevada buyer?
AA buydown is a reduction in the purchase price negotiated by the buyer's agent
BA buydown is when the buyer (or seller) pays upfront points to reduce the interest rate on the mortgage, lowering monthly payments either temporarily or permanently✓ Correct
CA buydown is a Nevada program for purchasing distressed properties below market value
DA buydown is the reduction of principal through extra payments
Explanation
A mortgage buydown reduces the interest rate by paying discount points upfront (1 point = 1% of loan amount). Permanent buydowns reduce the rate for the full loan term. Temporary buydowns (like 2-1 buydowns) reduce the rate for the first 1-2 years then step up to the note rate. In Nevada, seller-paid buydowns became popular during higher interest rate periods to help buyers qualify or reduce initial payments.
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