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Real Estate Glossary

Buy down

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Written by Luis Escobar

A technique in mortgage financing, buy down is a cash payment wherein the buyer sets a low interest rate for the first few years of a mortgage. In this agreement, the seller typically provides the payment to a mortgage-lending company. This then lowers the buyer’s monthly interest. In order to recoup for the costs of the agreement, the seller will normally increase the purchase price of the property.

A technique in mortgage financing, buy down is a cash payment wherein the buyer sets a low interest rate for the first few years of a mortgage. In this agreement, the seller typically provides the payment to a mortgage-lending company. This then lowers the buyer’s monthly interest. In order to recoup for the costs of the agreement, the seller will normally increase the purchase price of the property.

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Luis Escobar

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