General Mortgage KnowledgeQuestion 105 of 400
A loan has a note rate of 6.00% with a 2-1 temporary buydown. What is the interest rate the borrower pays in year one?
a.4.00%
b.5.00%
c.6.00%
d.3.00%
Explanation
In a 2-1 buydown, the rate is reduced 2% in year one and 1% in year two. Year one = 6.00% - 2% = 4.00%. 5.00% is year two, and 6.00% is the permanent note rate after the buydown ends.
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