BUYDOWNS, POINTS, ARMS & CREDITS

Compare Mortgage Financing Strategies

Same home. Different ways to finance it.

The rate matters. So does what you pay to get it, when the payment changes and the cash you keep. Let’s give each strategy a clear job before you choose one.

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A temporary buydown supports early cash flow; discount points exchange upfront cost for a lower note rate; an ARM has contractual rate adjustments; seller and lender credits can reduce eligible closing costs in different ways. Compare each structure against your goals and a consistent baseline.

Start with the goal

Early cash flow

Compare temporary subsidy

Longer-term rate

Evaluate points and cost

Cash at closing

Review eligible credits

Five tools, five different questions.

Structure	What it does	What to watch
Temporary buydown	A funded subsidy offsets part of the payment for a specified period.	Plan for the full payment after the subsidy. The note terms do not disappear.
Permanent discount points	Pay an upfront amount for a lower rate than the comparable no-point option.	Compare the upfront cost against your likely loan horizon.
Adjustable-rate mortgage	Has an initial rate period, then adjustments under the contract.	Review index, margin, caps and payment risk if you keep it.
Seller credits	Apply an agreed contribution to eligible transaction costs.	Program limits and actual eligible costs can restrict usable credit.
Lender credits	Offset eligible closing costs. Rate-related lender credits are typically paired with a higher interest rate.	Compare the credit, rate and costs over your expected timeline. Record lender credits separately from seller contributions.

Choose a payment plan that works beyond the introductory period.

Review the payment you would make after a temporary subsidy ends or an ARM reaches an adjustment date. Cederholm Mortgage Advisors can help you compare the initial payment, later payment obligations and the cash you want to keep.

A temporary buydown is funded under a written agreement. Depending on the program and transaction, funding may come from a seller, builder or lender. Confirm the funding source, eligible costs and contribution limits with our team. The subsidy does not change the mortgage note terms, and qualification follows the selected program’s rules. For example, Fannie Mae requires qualification at the note rate without the temporary subsidy.

For an ARM, review the index, margin, adjustment timing and caps. Refinancing later depends on future rates, credit, income, equity, property eligibility and closing costs, so the initial plan should remain manageable under the loan’s actual terms without relying on a future refinance.

Smart home financing starts with strategy

Buying or refinancing? We compare options across our network of 150+ wholesale lenders, explain the trade-offs, and build a plan around your goals. Start with a pre-approval video conversation so you know what to expect before moving forward.

Start My Mortgage Strategy

Put points into dollars.

One point equals 1% of the loan amount. On a $400,000 loan, one point costs $4,000. The amount of rate reduction is not fixed; it depends on actual pricing.

If that cost were associated with a $100 monthly payment reduction on a comparable option, simple break-even would be 40 months. This is an invented planning example, not a rate quote, and it ignores other cost and balance differences.

Choose your next comparison.

Keeping more cash

Compare credits and lower upfront-cost options, including their ongoing cost.

Staying for years

Compare points over several holding periods, with remaining balance included.

Expecting a transition

Review the fixed option, ARM risks and selling costs without assuming a sale or refinance.

Questions worth asking

Does a 2-1 buydown permanently reduce the note rate?

No. The subsidy temporarily offsets payments under the agreement. The mortgage note retains its stated terms.

Is an ARM always cheaper?

No. Pricing varies. Any initial difference must be considered alongside adjustment terms and your ability to manage future payments.

Can seller credits fund a buydown?

Sometimes, subject to the program, credit limits, contract, lender and eligible costs. Confirm the full structure before negotiating.

How do I choose?

Start with cash available, the full payment, likely ownership period and tolerance for change. Ask the team to compare options on the same assumptions.

Keep planning

Sources and information

Information is educational and is not a loan offer, rate quote, approval or commitment to lend. Programs, costs and qualification requirements depend on the borrower, property, selected lender and current guidelines. Hypothetical examples are not client testimonials or guaranteed results.

Let’s make your next step clearer.

Tell us whether keeping cash, payment stability or longer-term cost matters most, and how long you expect to keep the loan. Cederholm Mortgage Advisors can compare a consistent baseline with the strategies available for your situation, explain the payment beyond any introductory period, and review costs and remaining balances over your timeline.

Give each financing choice a job

Compare the baseline your team provides with the strategy being considered, using consistent loan assumptions. Enter the actual figures from the options reviewed with you. An early payment subsidy, a lower note rate and lower cash to close are different outcomes.

Print or copy this worksheet for your own notes. On a smaller screen, scroll sideways to see both columns. This page does not collect or save entries; do not record account numbers or other sensitive identifiers.

Financing strategy comparison worksheet
What to compare	Baseline	Strategy being considered
Structure and assumptionsRecord loan amount, term, occupancy, pricing date and lock period. Name the strategy being considered.
Upfront loan costs and pointsList charges and any discount points separately.
Seller and lender creditsRecord the source, amount and permitted use of each credit separately.
Cash at closing and savings afterwardCompare cash still due and the funds you would keep after closing.
Initial loan paymentSeparate principal and interest, mortgage insurance and any temporary subsidy from taxes, insurance and HOA dues.
Payment after an introductory periodRecord when a subsidy ends or an ARM may adjust. Include the full payment and relevant adjustment limits.
Time in the loanReview shorter, most likely and longer holding periods.
Costs and remaining balanceAsk our team to compare costs and remaining loan balances at those dates.
Questions for your advisorConfirm funding sources, program qualification rules and any assumptions that need a closer review.

Tell us whether keeping cash, payment stability or longer-term cost matters most. We can compare the available structures without relying on a future refinance.

What happens next? The button below opens our secure loan inquiry. Tell us your goal and timing so we can discuss the relevant costs, documents and options. Prefer a conversation first? Call 303-931-6798 or contact our team. Share sensitive documents only through the secure channel we provide. A conversation is not a loan approval or commitment.