"Rate buydowns" is a term being tossed around often these days and that's because high interest rates are forcing people to look for creative solutions (both for buyers and sellers). • A rate buydown is exactly what it sounds like - Buying down your rate. First, its important to remember that your interest is the payment the lender is paid for giving you a loan. For most situations, a lender will exchange a certain percentage of an interest rate point for a large upfront payment. The lender is satisfied because they still make money and you're happy because your interest is lower (which lowers your overall mortgage payment). • The common situation is a 0.25% interest rate decrease for 1% of the loan amount. If you're getting a loan for $500,000 - one discount point would cost $5,000. Luckily for buyers, a lot of sellers are willing to pay the discount point (or multiple) in order to appeal to more buyers and increase their chances of selling. Don't give up just because rates are high...