Have you wondered if paying discount points is the right thing to do for your mortgage? My new blog post explains the ins and outs of points so that you can make a better decision.
Two of the sweetest words in the English language might be "discount" and "point." After all, everyone loves a discount, and points are usually a pretty good thing whether you're taking a test, playing football or just using a freshly sharpened pencil. When it comes to a mortgage, though, discount points aren't as cut and dry. They're always a good thing, but you can't be sure whether they're a good thing for you or a good thing for your lender without digging a bit deeper..
Points and MortgagesDeciding whether or not to pay a point is relatively simple. From the perspective of saving money, it doesn't make sense to pay discount points if you won't hold on to your loan for at least as long as it takes to break even. If you know it takes 69 months to start profiting from a point and you know you'll sell your house or refinance after 5 years (60 months), you wouldn't pay the point. On the other hand, if you're sure you'll pay off your mortgage in 30 years, paying the $2,250 now would save you $11,764.92 in monthly payments over the life of the loan.
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