Here is the comprehensive report on the 2 types of MORTGAGE RATE BUYDOWNS you can get.
I have put this together to help you make sense of the differences between the TEMPORARY and the PERMANENT mortgage rate buydowns.
TL/DR:
Benefits of the PERMANENT BUYDOWN:
- Interest rate improvement lasts the whole duration of the loan term
- Buyers QUALIFY at the lower payment - which can increase the total amount of money a borrower is allowed to access.
- If interest rates end up NOT improving in months/years to come, the Permanent Rate buydown will likely provide more financial benefit.
Benefits of the TEMPORARY BUYDOWN:
- Buyer creates more affordability in the short term. The monthly savings can be 2x or 3x better compared to the Permanent in that temporary time frame.
- The ENTIRE seller credit will go directly to the buyer (as opposed to the lender)
- If interest rates DO end up improving - any remaining money in the temporary subsidy account will be applied to offsetting refinance costs. If the remaining credit EXCEEDS the refinance cost, any remaining money would be applied to principal reduction of the mortgage.
Additional Detail:
- Permanent Buydown Strategy is available for Jumbo, Conforming, FHA, VA, and USDA loans
- Temporary Buydown Strategy is available for Conforming, FHA, VA, and USDA loans - but NOT JUMBO