Permanent Buydown
Potentially better for someone who:
- Plans long-term ownership
- Values payment stability
- Expects to keep the loan
- Has enough funds or seller credits
Temporary Buydown
Potentially useful for someone who:
- Wants lower initial payments
- Expects income growth
- Has seller-funded subsidy available
But the borrower must prepare for the full payment.
Break-Even
For permanent points:
Cost of buydown divided by monthly savings equals approximate months to break even.
If you pay $6,000 to save $100/month, the approximate break-even is 60 months.
If you sell or refinance in two years, that may not be attractive.
Compare Alternatives
The same seller money might potentially be used for:
- Closing costs
- Temporary buydown
- Permanent points
- Price reduction
Have the lender price all available alternatives.
Use the buyer offer strategy calculator to compare structures on the same basis.
