What is a rate buydown?

Rates are averaging around 6.9% at this time.  A rate buy down means the seller is going to contribute to buy the rate down from the lender, allowing you to reap the benefit of a lower payment for 2 years (a 2/1 buydown).  See below for an example.  P&I is principal and interest, the PITI (principal, interest, taxes and insurance) will vary depending on taxes and insurance.

What does this mean for you as a buyer?

Rates fluctuate over time, so with this incentive, you increase your buying power.

What does this mean for you as a seller?

This provides a huge benefit to the buyer BUT is less expensive than a price reduction. Win/Win!