A buydown is primarily designed to...

A buydown is a financing technique used primarily to lower interest rates during the initial years of a loan. This can provide borrowers with temporary relief on their monthly payment obligations, helping them manage their financial situation more easily at the beginning of the loan. Typically, a lump sum payment is made upfront, either by the borrower, the builder, or a third party, which effectively "buys down" the interest rate, resulting in reduced monthly payments for a specified period.

In this context, the goal is to facilitate home buying by making the initial payments more affordable, which can be particularly appealing for first-time buyers or those who expect their income to increase in the future. Over time, as the loan progresses, the borrower will experience the normal interest rate, which might be higher than during the initial years, but the buydown can provide essential financial breathing room when cash flow is tight or when buyers are trying to settle into a new home.

The other options do not accurately describe the primary purpose of a buydown. Instead of increasing the total cost of the loan or providing immediate funds to the lender, the focus is on short-term interest relief. Similarly, extending the repayment period is a different process that relates to loan restructuring rather than the specific