An Ohio lender offers a buyer a mortgage with a 'buydown.' A 2-1 buydown means:
Correct Answer
C) The interest rate is reduced by 2% below the note rate in the first year and 1% below in the second year, then returns to the full rate
A 2-1 buydown temporarily reduces the interest rate: the rate is 2% below the note rate in Year 1, 1% below in Year 2, and then reverts to the full note rate for the remaining term. This is funded by an upfront payment (often by the seller or builder) placed in an escrow account.
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Related Concepts
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
More Oh Financing Closing Questions
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A buyer purchases a home in Ohio for $240,000 with a 20% down payment. What is the loan amount?
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In Ohio, after the deed is recorded, the county recorder assigns the document a recording reference number. This number is important because it:
In Ohio, the conveyance fee is paid at the time of:
- → In Ohio, property tax prorations at closing are typically calculated based on:
- → In Ohio, the conveyance fee (transfer tax) on real estate transfers is calculated at a base rate of:
- → In Ohio, the conveyance fee statement (DTE 100 form) must be filed with the county auditor when transferring real property. This form requires disclosure of:
- → In Ohio, the real estate closing process is commonly referred to as:
- → In many Ohio counties, closings are conducted by title companies or attorneys. Which statement about attorney involvement in Ohio closings is MOST accurate?
- → In Ohio, certain counties utilize the Auditor's Transfer Acknowledgment process. When submitting a deed for recording, the conveyance fee statement (DTE form) must accurately state the consideration. If the stated consideration is found to be fraudulently understated to reduce the conveyance fee, the seller may face:
- → In Ohio, some counties have adopted the Torrens system of title registration in addition to the standard recording system. Under the Torrens system, title to property is established by:
- → Under Ohio closing practices, all of the following documents are typically executed or delivered at closing EXCEPT:
- → An Ohio property is being sold by an estate. The executor of the estate needs to sign the deed. Under Ohio law, the executor's authority to convey real property is governed by:
- → Under Ohio law, all of the following transactions are exempt from the conveyance fee EXCEPT:
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