Does paying points to lower your Mortgage/Loan rate make sense?
Photo by Precondo CA on Unsplash Author: Andrew Lee About 2 minutes read Maybe you heard of points (a.k.a. Discount Points , Mortgage Points ) when applying for a conventional loan on a house or a property. Generally speaking, when you Buy Points , you are buying down the mortgage interest rate/loan rate. But have you ever looked into "points" and what does it really mean besides of buying down the loan rate? I hope this article can provide some value and insights for your due-diligence and do some calculations whether it makes sense for your situation. When it comes to buying points, you can request your lender (for conventional loan) to provide a list or comparison so you know how much you are paying to buy down points and how long to break-even since you are paying an amount upfront to lower your loan rate. It will take awhile on your monthly savings to cover this upfront cost. The following example uses a loan amount of $600,000 with a 30 years fixed 3.5% loan rate ...