Finance
In Texas, a 'permanent buydown' of an interest rate using discount points means the buyer pays money at closing to:
ATemporarily reduce the rate for the first 2-3 years
BPermanently reduce the interest rate for the life of the loan✓ Correct
CReduce the loan amount principal
DEliminate the need for PMI
Explanation
A permanent buydown uses discount points (prepaid interest) paid at closing to permanently reduce the loan's interest rate for its entire term. Each point (1% of the loan amount) typically reduces the rate by 0.25%. The break-even analysis determines how long the buyer must keep the loan to recoup the upfront cost through lower payments.
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