A permanent buydown lowers the mortgage rate for the full life of the loan rather than only for an initial period.
A permanent buydown lowers the mortgage rate for the full life of the loan rather than only for an initial period.
Permanent buydown matters because borrowers planning to keep the mortgage for a long time may prefer lasting savings over short-term payment relief.
It also matters because the benefit comes with an upfront cost. Borrowers need to judge whether the long-term rate reduction is worth the extra money paid at closing.
Borrowers encounter permanent buydown choices during quote comparison and loan-structure discussion.
The term becomes most practical when the borrower is deciding whether to spend more at closing in order to reduce the note rate and monthly payment for the entire loan term.
A borrower pays more upfront at closing to lock in a lower rate that lasts for the whole mortgage. That long-term reduction is a permanent buydown.
Permanent buydown differs from Temporary Buydown because the permanent version reduces the rate for the full term, not just for the first years.
It also differs from Discount Points. In many transactions discount points are the mechanism used to achieve a permanent buydown, but the buydown concept describes the lasting effect while points describe the upfront charge.