What is a Temporary Interest Rate Buy Down? - Definition

What is a Temporary Interest Rate Buy Down? - Definition
A temporary interest buy down is one form of a graduated payment mortgage. The Borrower will pay a fixed fee at the front of the loan to buy the rate

down for a predetermined amount of time. Typically either one or two years. The rate adjust every year until the final rate is reached. For Example, in a two year buy down the first year the rate may be 5.875, the second year the rate may be 6.875, and then the third year the final rate of 7.875 is achieved and would remain for the life of the loan.