What is one effect of a mortgage buy down on a borrower's loan?

A mortgage buy down is a financing technique where the seller or buyer pays an upfront fee to lower the interest rate on the mortgage. This results in reduced monthly payments for the borrower during the initial years of the loan. The most significant effect of this strategy is that it makes the mortgage more affordable at the outset, allowing the borrower to benefit from the lower monthly payments. This can be particularly advantageous for new homeowners who may find it challenging to manage higher payment levels in the early stages of home ownership.

In contrast to the other options, a mortgage buy down does not increase overall mortgage payments, provide cash back, or eliminate principal payments. Overall, the primary purpose of a buy down is to improve cash flow for the borrower by lowering their initial monthly payment, which is why this choice is the most accurate answer.