I really thanks to Dan Melson from Searchlight Crusade wrote an article called Rate BuyDowns. I have no idea what it is before reading Dan Melson’s article, but today, I roughly have some brief ideas what actually Rate BuyDowns is.

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What Is Rate BuyDowns?

A rate buydown is where for an upfront price, the lender agrees to give you a lowered interest rate for a time. 2/1/0 buydowns, where the rate is two percent lower the first year, one percent lower the second year, and then at the loan rate the third year.

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After reading this article, I found that Rate Buydowns is not really a good choice in long run. You may save some money at starting point but you will end up and pay more in long run. But I don’t know if I use this rate to buy a real estate property that I know I’m going to sell it within 1-2 years, will this rate buydowns become a good choice since I can save some money at the first 2 years.

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What do you think…….?

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If you want to read the full article of Dan Melson, you may click here. There you can read a few table that show you the effect of Rate BuyDowns and at the end you will know why Dan don’t recommend Rate BuyDowns.

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Source : Searchlight Crusade

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