Rate buys downs are still happening. Even though mortgage rates have come down about 1% from their peak last fall, homebuyers are still buying down their rates. A rate buy down is a way to get a lower interest rate over the life of the loan by paying upfront fees. Black Knight, a housing data aggregator, says that 57% of buyers used a rate buy down on their loans in January. While that’s certainly a large percentage, it was as high as 71% back in October. Whether or not buying down the rate is a good idea depends upon your situation. If you plan to have the loan for just a few years, it probably doesn’t make sense because you won’t have time to recoup the upfront fees. But if you plan to have the loan for a while, and don’t like the prospect of trying to time a refinance later, then a buydown is something you should consider.
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