What is an interest rate buy-down plan?
The Bankrate.com financial term of the day is: "Interest Rate Buy-Down Plan"
Often, you can get a lower interest rate just by paying the price. With an interest rate buy-down plan, a borrower pays a fee to score a lower interest rate for the first couple of years of a fixed-rate mortgage or other loan. The rate rises later on to its normal level. In home sales, it's not uncommon for an eager seller to buy down a buyer's rate to help move the transaction forward.
To determine whether an interest rate buy-down plan is worth it, you need to weigh the fee against the money you'd save through the short-term rate cut.
To find a great rate on a home loan, visit the Mortgages section at Bankrate.com.