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Mortgage Buydown Agreement
"I need a Mortgage Buydown Agreement for a 2-1 temporary buydown on a new construction property, where the builder will contribute the buydown funds to reduce the effective interest rate from 7.5% to 5.5% in the first year and 6.5% in the second year, with the agreement to take effect March 1, 2025."
1. Parties: Identifies all parties to the agreement, including the borrower, lender, and any third party providing the buydown funds
2. Background: Explains the context of the mortgage buydown arrangement and the purpose of the agreement
3. Definitions: Defines key terms used throughout the agreement, including specific mortgage and buydown-related terminology
4. Buydown Structure: Details the specific structure of the buydown, including the initial rate, buydown periods, and rate adjustments
5. Buydown Funds: Specifies the amount of buydown funds, who is providing them, and how they will be held and applied
6. Payment Terms: Outlines the payment schedule, including the reduced payment amounts during the buydown period and subsequent adjustments
7. Lender Obligations: Details the lender's responsibilities in administering the buydown and applying the funds
8. Borrower Obligations: Specifies the borrower's responsibilities and acknowledgments regarding the buydown arrangement
9. Default Provisions: Addresses what happens in case of default or early termination of the mortgage
10. Term and Termination: Specifies the duration of the buydown arrangement and conditions for early termination
11. General Provisions: Standard contract clauses including governing law, amendments, notices, and entire agreement
1. Third-Party Funding Provisions: Required when the buydown is funded by a third party such as a seller or builder, detailing their obligations and payment terms
2. Escrow Requirements: Needed when buydown funds are held in escrow, specifying the terms of the escrow arrangement
3. Property Sale Provisions: Required when the buydown agreement includes provisions related to the sale of the associated property
4. Government Program Compliance: Necessary when the buydown is part of a government-sponsored program, ensuring compliance with specific requirements
5. Builder Warranties: Required when the buydown is provided by a builder as part of new construction financing
6. Assignment Provisions: Needed when the agreement allows for assignment of buydown rights or obligations
1. Schedule A - Buydown Calculation Table: Detailed schedule showing the calculation of buydown amounts and payment schedules over the buydown period
2. Schedule B - Payment Schedule: Comprehensive payment schedule showing regular payments, buydown amounts, and effective interest rates
3. Schedule C - Original Mortgage Terms: Summary or copy of the relevant terms from the original mortgage agreement
4. Schedule D - Source of Funds Declaration: Declaration form detailing the source of buydown funds for compliance purposes
5. Appendix 1 - Required Notices: Copies of any required regulatory notices or disclosures
6. Appendix 2 - Buydown Fund Release Authorization: Authorization forms for the release of buydown funds according to the agreement terms
Authors
Banking & Financial Services
Real Estate
Construction & Development
Mortgage Lending
Legal Services
Property Development
Financial Technology
Legal
Mortgage Operations
Real Estate Finance
Compliance
Risk Management
Credit Analysis
Property Development
Transaction Processing
Customer Relations
Documentation
Mortgage Broker
Real Estate Lawyer
Banking Officer
Loan Officer
Real Estate Agent
Property Developer
Financial Advisor
Mortgage Underwriter
Compliance Officer
Real Estate Transaction Manager
Construction Finance Manager
Treasury Manager
Risk Assessment Officer
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