Finance
A Virginia buyer is offered a 2-1 buydown. This means:
AThey pay 2 points to reduce the rate by 1%
BThe interest rate is reduced by 2% in year 1 and 1% in year 2, then resets to the note rate in year 3✓ Correct
CThe rate is fixed for 2 years then adjustable for 1 year
DThe buyer pays 2% less closing costs
Explanation
A 2-1 buydown temporarily reduces the mortgage interest rate — by 2% in year 1 and 1% in year 2 — with the cost paid by the seller, buyer, or builder. The rate returns to the full note rate in year 3.
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