Finance
In Oregon, what is an 'interest rate buydown' and how does it benefit buyers?
AA program allowing buyers to buy down property taxes
BA payment of discount points or a seller contribution that reduces the buyer's interest rate temporarily or permanently, lowering monthly payments✓ Correct
CA lender's reduction of interest rates for first-time buyers
DA government program subsidizing mortgage rates for low-income Oregonians
Explanation
An interest rate buydown uses discount points or seller concessions to reduce the buyer's mortgage interest rate. A permanent buydown reduces the rate for the life of the loan; 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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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