Duration of each buydown period
Indicate the duration of each buydown period from the pull-down menu.
To use the pull-down menu:
- Click on the arrow to the right-hand side of the field to view the selections of the pull-down menu.
- When you have found your choice, click on it once with the left button of your mouse.
Your options for Duration of each buydown period include:
Supplement Paid By
Using the pull-down menu, indicate who pays the buydown supplement.
To use the pull-down menu:
- Click inside the field or on the arrow to the right-hand side of the field to view the selections of the pull-down menu.
- When you have found your choice, click on it once with the left button of your mouse.
- Only the column on the left side is used, unless the buydown is split between two parties.
- If buydown is split, select the other payee in the right column.
Your options for Supplement Paid By are:
- Lender
- Seller
- Broker
- Buyer
Buydowns can reflect different buydown percents in each period. You have the option to input up to five buydown periods. Input the percentage of the buydown for each buydown period. You can input up to three decimal places.
Typical buydown rates are 3/2/1 or 2/1. For example, to input a 3/2/1 buydown, type 3.000 for the first period, 2.000 for the second period, and 1.000 for the third period. In this example, if the buydown were split, the second column would be used, and the supplements would appear as follows: 1.500 in each column for the first period, 1.000 in each column for the second period, and .500 in each column for the third period.
Buydown Analysis
The Buydown Analysis section calculates the effect the buydown has on the interest rate and P&I
of the loan, as well as the monthly and annual subsidy associated with each buydown period. Use
the Calculate Buydown button to update these figures based upon current input.
The Total P&I and Interest Rate columns show values from the Terms/Dates screen, and the values
in the Buydown % column come from the Buydown screen itself.
The Adjusted Interest Rate is the difference of the Interest Rate less the Buydown %, while the
P&I After Buydown column reflects the P&I as calculated using the Adjusted Interest Rate.
The Buydown Monthly Subsidy shows the difference between the Total P&I and the Buydown P&I, with
the Annual Subsidy column displaying the annual subsidy as derived from the Buydown Monthly
Subsidy and the duration of each buydown period.
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