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Finance Dictionary and Glossary of Investment Terms
Builder buydown loan
A mortgage loan on newly developed property that the builder subsidizes during the early yearsof the development. The builder uses cash to buy down the mortgage rate to a lower level than the prevailing market loan rate for some period of time. The typical buydown is 3% of the interest rate amount for the first year, 2% for the second year, and 1% for the third year (also referred to as a 3-2-1 buydown).