_____________ is a financing made available by a builder or a seller to a potential new home buyer at well below market interest rate, often only for a short period, is called:
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A. B. C. D.A
The financing option described in the question is called a "buydown."
A buydown is a type of mortgage financing arrangement in which a builder or seller provides a buyer with a temporary interest rate subsidy on a home loan, typically for the first few years of the mortgage. The purpose of a buydown is to reduce the initial monthly payments and make the home more affordable to the buyer.
During the buydown period, the interest rate on the mortgage is lower than the prevailing market rate. The reduction in interest rate may be offered in the form of a percentage point discount on the rate, a lower initial rate that gradually increases over time, or some other variation. After the buydown period ends, the interest rate and monthly payments typically adjust to a higher level that reflects the prevailing market rate.
Buydowns may be structured in various ways, but they typically involve the seller or builder contributing a lump sum of money to a third-party financing company, which in turn uses the funds to reduce the buyer's monthly payments. In some cases, the buyer may be required to make an upfront payment to the financing company in order to receive the buydown benefit.
Buydowns can be advantageous for buyers who want to reduce their initial monthly mortgage payments, but they may not always be the best option. For example, if a buyer plans to sell the home within a few years, the benefits of the buydown may not outweigh the costs of the upfront payment or the higher payments after the buydown period ends. Buyers should carefully evaluate their financial situation and long-term plans before deciding whether a buydown is the right choice for them.