Is It A Good Idea To Pay Points On A Mortgage?
When you go to closing on a mortgage, you have a number of options available to you. One of these is to pay points so that the interest rate can be reduced. Here is what you need to know to help you determine if you should pay points on your mortgage.
A mortgage point is equal to 1% of the total cost of the mortgage. So, if you are getting a mortgage for $150,000, then it will cost you $1,500 per point. For each 1% of interest, there are 8 points. In other words, it will take 8 points to bring down the interest rate one full percent. Each point paid will reduce the interest percentage by 0.125%. Usually, you can see some savings if you bring it down even one point.
Paying points at closing can reduce your interest and bring you savings, but not everyone can benefit from it. Generally, you would need to stay in your house for a number of years – it really will not help if you are not going to stay long.
The reason for this can be seen in the following example. This will show you how to determine how long it will take to break even. If you buy a house for $100,000 at 7.5% interest, then you would...
To view and download this full PLR article, you must be logged in. Registration is completely free. Once you create your account, you will be able to browse, search & downlod from our PLR articles database of over "1,57,897+" on 1,000's of niches and 200+ categories without paying a penny. Click here to signup...
