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Suzanne
May the Force Be With You!
Member since 5/05 2083 total posts
Name:
Suzanne
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Points?
Can someone explain points to me please. This whole mortgage thing is like a foreign language to me
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Posted 4/24/06 4:17 PM  |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: Points?
Its a tax deductable fee you pay to reduce your interest rate. A point is 1% of your mortgage.
So if you are asked to pay 1 point on a 400k mortgage. Thats a 4k fee that gets added at closing.
If they say 1/4 of a point... thats a 1k fee.
People pay points if they plan on being in their house for a LONG time (like 5+ years), and have no plans on refiancing. If you refinance a loan... the benefit of paying points is nullified.
The money you pay up front in points to get a lower interest rate... will save you cash in mortgage interest over the life of the loan.
But they key is... you only reap this benefit in time so you have to be in the house for a while.
I don't particularly care for paying points... I prefer to look for loans with "zero points". But some people pay points and don't mind since they plan on being in a house for 10 years or so.
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| Posted 4/24/06 4:23 PM |
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Suzanne
May the Force Be With You!
Member since 5/05 2083 total posts
Name:
Suzanne
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Re: Points?
Ok thanks. I think I get it.
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| Posted 4/24/06 4:28 PM |
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