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Interest rates buy down

My agent suggested I should consider asking for interest rate buy down from seller instead of asking for lower house price. I understand buying points and the math for it, there are calculators online as well. But my agent was talking about 2 year buy down. I didn’t find a calculator and was trying to figure it out using a spreadsheet.

I have a call with my broker tomorrow but want to understand the numbers ahead of time since I get confused when people throw out numbers.

Let’s say if interest rate is 7% and the seller is buying down 2% for 2 years.

For first 2 years, I calculate all payments based on original loan amount, 30 years term, and 5% interest rate.

For next 28 years, I use 28 years term, remaining loan amount, and 7% interest rate.

Is this correct?

I get it that for the first 2 years payments are smaller. The part I want to make sure I’m doing right is that in this case the payments after 2 years are smaller than if the interest rate was always 7%

submitted by /u/ADTheNoob
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source https://www.reddit.com/r/RealEstate/comments/15aowh7/interest_rates_buy_down/
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