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Real Estate tgt
Eileen M. Day REALTOR
BUY DOWN HAZARDS
Buy downs are designed for buyers who are having trou ble qualifying for a mortgage, but expect their income to in crease over time. Typically, the developer or seller will contrib ute a lump sum to a fund that is used, literally to “buy down' the mortgage rate.
Let’s say you can't afford the payments at 12%, but can afford a 9% loan. So the bank qualifies you at 9% and every month withdraws enough money from the buy down ac count to cover the diffenence between your payment (base on 9% ) and what it should be at the market rate (12% in this ex ample). The advantage is that you get to buy the house The disadvantage is. the buy down lasts only until the funds are ex hausted (usually somewhere between l and 3 years). Then the rate pops up to 14% .
Unfortunately, life doesn't always go as planned. Income growth may be slower than ex pected. If you are considering a buydown, make sure you know the risks as well as the benefits involved.
If there is anything we can do to help you in the field of real estate please stop in at EILEEN M. DAY, Realtor, The Clopton House, Washington. Va 22747 Phone 675 3033. Were here to help
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