A method of getting a lower interest rate by making an upfront payment on a loan of a 1 or more “points.” Discount points, or buydown points are equal to 1% of the loan amount. In the case of a permanent buydown, each discount point bought lowers the interest rate by 0.125% over the life of the loan. Many buydowns are structured as temporary interest rate reductions which are in place only for the first few years of a loan.
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