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Interest Rate Buy Down

Mortgage Library: Ask a Mortgage Related Question: Answers: Interest Rate Buy Down

Question:

What does it mean to buy down your Interest Rate. What is the usual cost to buy down. I was offered a interest rate of 6.625%. I want it lower and was told that I could buy the interest rate down. 

M. T.

Pearland
Texas

Answer:

M., buying down the interest rate means paying points. Either origination or discount points, it works the same way. One point is one percent of the loan amount. For example, if your loan amount is $100,000 and the interest rate is 6.625%, you might buy it down to 6.375% by adding one point ($1,000) to your closing costs. There is no set amount a buy-down will cost -- generally one point will buy down the interest rate about .25%. Negotiate with your loan officer or call me!

Rick Lanicek
PrimeLending, A PlainsCapital Company
17950 Preston Rd Ste 50
Dallas, TX 75252-5759
(972) 705-9721
(800) 256-0817 Ext 202
Mobile (214) 552-6125
eFax (972) 692-7260


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