WOULD IT BE BENEFICIAL TO BUY POINTS TO LOWER YOUR INTEREST RATE ?

by Maria Del "Carmen" Sanchez

Purchasing points can be a good idea to decrease the interest rate on a mortgage loan. By buying points, you can reduce the interest rate of your loan, typically by 0.25 percent per point .

Each mortgage point typically lowers your loan's interest rate by 0.25 percent, so one point would lower a mortgage rate of 4 percent to 3.75 percent for the life of the loan

However, keep in mind that this requires an upfront payment, and the longer you plan to live in a home, the more benefit you'll get from paying for points

If you can afford to buy discount points on top of the down payment and closing costs, you will lower your monthly mortgage payments and could save lots of money

The key is staying in the home long enough to recoup the prepaid interest

Overall, purchasing points can be a good idea to decrease the interest rate,

But it depends on your financial situation and how long you plan to stay in the home.

How much does each point cost?

Each mortgage point typically costs 1% of the total amount mortgaged1For example, if you take out a mortgage for $300,000, one point will cost you $3,000

If you bought two points, you'd pay $6,000 when your mortgage closes

 

HOPE THIS HELP UNDERSTANDING  THE PURCHASING OF POINTS TO DECREASE YOUR INTEREST RATES

ANY QUESTIONS YOU CAN CONTACT ME .

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