Finance
An Oklahoma homeowner who received a 2-1 buydown from the builder when purchasing their home should understand that:
AThe interest rate is permanently reduced by 2%
BThe interest rate is reduced by 2% in year 1 and 1% in year 2, then returns to the full note rate in year 3 and for the remaining loan term; payments increase as the buydown period ends✓ Correct
CThe loan amortizes twice as fast
DOnly the first two payments are affected
Explanation
A 2-1 buydown temporarily reduces the interest rate by 2% in year 1 and 1% in year 2. In year 3 and beyond, the borrower pays the full note rate.
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