General Mortgage KnowledgeQuestion 133 of 400
A loan has a note rate of 7.00% with a 3-2-1 temporary buydown. What rate does the borrower pay in the first year?
a.4.00%
b.5.00%
c.6.00%
d.7.00%
Explanation
A 3-2-1 buydown reduces the rate 3% in year one, 2% in year two, and 1% in year three. Year one = 7.00% - 3% = 4.00%. 5.00% is year two and 6.00% is year three.
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