Should you pay points on a mortgage?


By Nicole Rueth - June 26, 2019

What's the point of paying points?  I'm not a huge fan of spending unnecessary money at the closing table when you can allocate those funds for additional investments!  But many banks charge them.  So let's first define a "point".  A point is 1% of the loan amount.  When it comes in the form of an Origination Fee, it is usually a bank fee.  You will see this with a lot of the box banks as well as on most VA or down payment assistance loans.  A Discount Point on the other hand is pre-paid interest used in order to buy down your rate.  As an example, one point might lower your interest rate by .25%.

Whether or not you pay points should be more of a math problem then an emotional one.  I always ask my clients two questions.. (1) how long do you plan on living in this home and (2) is this the best return you can make on your money.  

Advocating for our clients long term wealth is what our team does best!  Do you want to ensure you are getting the best rate and start building your wealth in real estate, give me a call today to get started!
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