The general mantra in the real estate world is you want to avoid paying points when obtaining a mortgage. As with most assumptions, this is not always true.
Using Points To Cut Your Interest Rate
When discussing mortgages, it is important to understand what points are. Points are essentially an upfront cost you pay a lender in exchange for getting the loan in question. The better your financial profile credit score, wages, down payment amount the fewer points you have to pay, if any. That being said, you may actually want to demand points in certain situations.
Points and interest rates have a unique relationship in mortgages. Generally, the more points you pay, the lower your interest rate. This is not always the case in bad credit situations, but it is a generally accepted fact for most bowers. You can use this relationship to your advantage.
Regardless of how many points you pay on a loan, the cost will never remotely approach the amount of interest you pay over the life of the loan. If you intend to live in the property in question for a long time, you should make an almighty effort to cut your interest rate as low as possible. This is...
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