Hi Jenny, there's a difference between a temporary rate buy down (as Wallace correctly describes) and a permanent "buy down" of an interest rate via points/lender fees as I outlined in the link below (the latter provides the best long-term savings):

http://www.trulia.com/voices/Property_QandA/How_is_it_that_r…

Best, Steve

Hi Jenny! Buying Down your interest means just that. You pre-pay the interest owed the lender with a one time UP FRONT fee. For example: To Buy Down your interest rate from 4.75% to 3.75% would cost you one percent of the loan amount for a one year reduction in the rate. (One percent of the loan amount = $2,000 on a $200,000 loan amount etc.) Determining how much it costs to Buy down the rate on a Permanent Basis, that is for the life of the loan, requires a bit more math but the concept is the same. Rates are published at varying levels, the lower the rate, the higher the cost of obtaining the lower rate due to the adjustment in the upfront fee or "points"! This is a very elementary explanation but serves the purpose here I think. If you would like a more detailed explanation please feel free to contact me or any other lender. We can send you all the pre-printed disclosure information you might require.

Hi there Jenny, I think we need more information to answer this for you exactly, But I am interpetign this correctly Many times you can negotiate the seller of a home to buy down a point which will reduce the interest rate for the buyer. This is a very useful tool if you cannot get the monthly payments that you you need. It will save you thousands in the long run.
If presented correctly to the seller it is usualy agreed to. It is preferable for the seller over a low ball offer, so the seller and buyer both win and you get the house at the payments you need.

If you have any questions on this your realtoir should be familair with this tool.
If you ar not workig with an agent drop me a line and I can offer you some help

Kind Regards
Michael Barron
Realtor/MBA
First Team Real Estate
(714) 552-6817

It means that you pay an additional "POINT", or fee, to the lender in exchange for a lower interest rate on your loan. If you are planning on staying in your home for a long time it might make sense to consider. Simply divide the cost of the buy down by your monthly savings and you see how long you need to stay in your home to be paid back.

I rebate back part of my commission to my clients and I always recommend that they consider "buying down" their rate with my rebate money. If you were to stay in the home for 10 to 15 years you could save thousands of dollars.

Call or email me if you want more information on my rebate program, I'm close by Whittier.

Brad Davidson
714-961-8442
brad@wehelpubuy.com http://www.wehelpubuy.com