Are Mortgage Points Worth It?

There are some cases where buying mortgage points can save you a substantial amount of money over the life of your loan. While mortgage discount points are an excellent choice for some borrowers, they’re not right for everyone. To determine if mortgage points are right for you, there are two main questions to ask yourself.

How Long Do You Plan to Live in Your Home? The length of time you stay in your home is one of the most important factors. If you only plan to live in your house for a few years, it’s probably a better decision to pay lower closing costs and higher monthly payments. How Much Money Do You Have

to Put Down at Closing? If your down payment on a conventional loan is under 20%, you may be required to pay private mortgage insurance (PMI), which can cost about 1% of the loan amount annually. This is important for clients who are on the fence between paying for mortgage discount points or a larger down payment. If it’s between discount points and boosting your down payment to 20% or over, you’ll want to choose the down payment most of the time. Always do the math and consider if your discount points are costing you more or less than your monthly PMI fees.

There are a variety of factors that go into whether you should purchase discount points to buy down your interest rate. I can help you determine if mortgage points might be right for you!