Mortgage rate buydowns are on the rise as homebuyers cope with high interest rates
Buyers received concessions in 42% of home sales in the fourth quarter, according to RedFin's January report
Though buyers can't be sure interest rates will drop by the time they're ready to refinance, mortgage rate buydowns have become a popular strategy to attract buyers who may otherwise be hesitant to purchase a home under today's high interest rates
Types of buydowns:
The 1-0 buydown, in which the contract interest rate drops 1% for the first year of the loan.
The 2-1 buydown, in which the rate drops 2% for the first year and 1% the second year before returning to the contract rate in the third year.
The 3-2-1 buydown, in which the interest rate drops 3% the first year, 2% the second year and 1% the third year before returning to the contract rate in the fourth year.