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A 2-1 buydown is a financing option where the interest rate is temporarily reduced by 2% in the first year and 1% in the second year. In the third year, the rate returns to its original value. This can lead to significant savings, especially in the first year.
- A 2-1 buydown can reduce a 6% interest rate to 4% in the first year and 5% in the second year.
- On a $320,000 mortgage, this can save nearly $4,700 in the first year and over $2,300 in the second year.
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