General Mortgage KnowledgeQuestion 175 of 400
How does a permanent buydown differ from a temporary buydown?
a.A permanent buydown only lasts one year
b.Neither changes the payment
c.A permanent buydown lowers the note rate for the full loan term, while a temporary buydown reduces the rate only for the first years
d.A temporary buydown lasts the whole term
Explanation
A permanent buydown (paying discount points) lowers the note rate for the entire term, whereas a temporary buydown (like 2-1) reduces the effective rate only for the initial years before reverting to the note rate. Both do change the payment.
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