How Can I Use A Buy Down On A Mortgage?

Mortgage lenders carefully look over your application and offer you an interest rate based on many factors, including:

• Your income
• Assets
• Bank statements
• Tax records
• Employment documentation
• Letters of explanation
• Business licenses or permits
• Credit history

Mortgage lenders use all of these factors and more to verify what kind of a risk you are. The higher your risk the more likely they are to boost your interest rate. This increase is compensation to the lender is compensation for lending to a higher risk borrower.

Interest Rate Offered Too High?

Mortgage lenders add up all your risks and offer you an interest rate as a result.

The higher your interest rate is the higher your monthly payment is.

For some borrowers the interest rate may be way too high.

You possibly will be able to "buy down" your interest rate by paying the lender money up front.

In a purchase loan you might be able to use a closing cost credit towards this. In a refinance you may be able to use some of your equity to pay for the buy down. Either way you can avoid coming up with hard cash out of your pocket. You can try to use your own cash to buy down your interest rate as well.