A mortgage rate buy-down is a way to lower loan payments by paying money upfront. This payment can come from the buyer or as seller paid points agreed during the deal. Many buyers use this option to reduce mortgage rate with seller credit, which helps lower monthly costs at the start. These interest rate concessions are common when the seller offers help as part of a seller contribution mortgage. During a buyer consultation, buyers can learn how mortgage points explained work and how they affect long term payments.
There are two main options. A temporary option lowers the rate for the first few years, while a permanent option lowers it for the full loan term. In both cases, the goal is to buy down mortgage rate and make payments easier to manage. In some cases, novations are used to adjust contract terms so seller credits are applied correctly. This approach works well for buyers who want lower payments early and plan to earn more later, while sellers benefit by closing the deal faster without cutting the home price.