By Adriana Montes
What’s the point of mortgage points?
Mortgage points besides helping you negotiate a good price for your home, they can help you also help you get the best mortgage rates and for the experienced homebuyers, mortgage points will lower the amount of interest they pay. WHAT ARE MORTGAGE POINTS By now you know that mortgage points are a great way to lock in lower interest rate on the home purchase or even in refinancing. WWW.THEPOWERISNOW.COM
What you don’t know probably is that mortgage points are fees and as a borrower, you will pay the fees to the mortgage lender to trim the interest rate on the loan. This process is sometimes referred to as ‘buying down the rate’ where each point costs 1 percent of the mortgage amount. Simply put, one mortgage point on a $250,000 mortgage would cost $2,500. Each point typically lowers the rate by 0.25 percent therefore, one mortgage point would lower the mortgage rate of 4 percent to 3.75 percent for the life of the loan. However, it is good to understand that how much a point lowers the mortgage rate will depend on the lender, the type of the loan and the overall interest rate environment.
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here is no debate about it. Buying a home will be the most expensive single purchase you will probably make in your lifetime! As such, anything that you can do to reduce the cost of the mortgage might be worth discussing and therefore in this article, we are going to look at mortgage points, what they are and how they can help you get a good deal for your home purchase.
