Better Homeowners
The Coastal Team Naples

Temporary Buydowns: What Happens to Unused Funds If You Sell or Refinance Early? - 9/17/2025

A temporary buydown is a great tool to help ease into homeownership with lower initial monthly payments, especially helpful in a high-rate environment. It allows you to enjoy reduced payments in the first one to three years of the loan, offering financial flexibility as you settle into your home.

With a buydown, the upfront cost is used to offset the difference between your actual mortgage payment (based on the full note rate) and the reduced payment you're allowed to make under the buydown terms. That difference is funded by a lump sum, typically paid by the seller, builder, or sometimes the borrower, and held in an escrow account by the lender or servicer.

For example, in a 2-1 buydown, the lender still loans the full amount at the note rate for the entire term of the mortgage. However, for the first year, the borrower makes payments as if the rate were 2% lower, and in the second year, 1% lower. The escrow account makes up the difference between what the borrower pays and what the loan actually requires, ensuring the lender receives the full payment due.

But What If You Sell or Refinance Before the Buydown Period Ends?

Here's the good news: If you sell or refinance the home before the buydown period is over, the unused portion of that escrow fund doesn't disappear, it typically comes back to you.

Since the funds were set aside to reduce your mortgage payments and you're no longer making those payments, the remaining balance in the buydown account is credited back to you at closing. It's your money, or a seller or builder credit given on your behalf, and once it's no longer needed for payment support, it returns to you.

It's always wise to confirm the terms with your lender or loan servicer, but most buydown agreements include this provision.

The Bottom Line

A temporary buydown offers upfront savings and long-term flexibility. And if your plans change, whether you sell or refinance early, you won't lose the benefit of the unused funds. It's just another way this strategy helps you manage your mortgage more efficiently, while keeping more money in your pocket.

Michael Sopka Broker Associate/ Luxury Real Estate Advisor Compass Florida LLC Naples, FL (239) 564-3819 BK3029429 Michael Sopka, a distinguished luxury real estate broker with an illustrious career spanning over two decades in the wealthy real estate market in Naples, FL. Born in Switzerland, Michael embarked on a journey that would shape a remarkable career in luxury real estate. Having spent his childhood in Germany, Michael developed a keen understanding of diverse cultures and a global perspective, which has proven invaluable in catering to an international clientele. His upbringing instilled a strong work ethic, attention to detail, and a commitment to excellence. In 2000, Michael made Naples, FL, his home, bringing with him a wealth of experience and a passion for delivering unparalleled real estate services. His arrival marked a strategic move to immerse himself in one of the most sought-after luxury markets in the United States. With a reputation built on integrity, professionalism, and a deep understanding of the luxury market, Michael has consistently matched discerning clients with their dream homes. His extensive network, honed negotiation skills, and comprehensive knowledge of Naples” real estate landscape make him a trusted advisor for those seeking the epitome of luxury living. Throughout his illustrious career, Michael has witnessed the evolution of the luxury real estate market and actively contributed to its growth. His commitment to staying ahead of market trends and his dedication to personalized service sets him apart as a leader in the industry. Michael brings sophistication, market insight, and a genuine passion for exceeding client expectations in every transaction. His track record speaks volumes, reflecting a consistent ability to navigate the complexities of luxury real estate with finesse. As a Naples resident, Michael understands the local market’s intricacies and is deeply connected to the community. Whether you are buying or selling a property, Michael is the epitome of a seasoned professional who not only meets but surpasses the expectations of those seeking the pinnacle of real estate services in Naples, FL Contact Me Visit my Website Send a Referral Subscribe to Newsletter