Should I Buy Mortgage Points?
What are Mortgage Points? Mortgage points, or discount points, are fees paid to the lender when you close on your home in exchange for a reduced interest rate. In essence, they are a down payment on interest when you purchase your home. One mortgage point usually costs one percent of your loan amount. For example, if your mortgage is $100,000, one point costs $1,000. Most lenders will let you purchase up to three points on your mortgage. What is My Breakeven Point? When trying to determine whether or not buying purchase points is right for you, first try to determine your breakeven point. The breakeven point is how long it takes to recoup the money you spent up front on discount points. Below is the formula used to determine your breakeven point: Points Cost ÷ Monthly Payment Savings = Months… Read More