What Is a Mortgage Buy Down?

Mortgage market refers to all financial institutions related to the purchase and sale of collateral. Where a mortgage transaction is a market formed by negotiations between the borrower and the original lender, it is called the primary mortgage market. For example, if a company borrows money from a bank, the bank requires that the loan be secured by the company's property or commodities. The purpose of this type of market is to bring those seeking mortgage funds together with those willing to invest in order to close the deal. Any market that uses the issued securities to trade among investors is called a subprime mortgage market. It facilitates the need for holders of mortgage-backed securities to dispose of their securities before maturity. ^[1]