I’m buying my first home and confused about buying points.

"Discount points" are an up-front fee paid at closing to lower the interest rate below what the real rate of the day actually is. A point equals 1% of the loan amount. Deciding to buy down the rate is just simply math. How much do the points cost you, what is the monthly payment savings, what is the cost vs savings break even period. then, will you be in the home long enough for it to make financial sense, and do you have the additional up-front money needed to pay it today? Points and the rate difference they provide will vary on any given day as the mortgage market moves. Points are not automatically a good thing or a bad thing. Do the math, and you'll have your answer. Note that interest rates with a lot of points included are what you generally see all over in mortgage advertising to capture your attention, but at least with my clients, most people don't pay any points, or maybe just a tiny bit. I lend in MN WI IA ND SD. Find me at JoeMetzler.com - Cambria Mortgage, NMLS 274132 (651) 552-3681

At this time in this market, points are not being used to buy a rate down, they are being charged to borrowers because the lenders cannot charge a high enough base interest rate. So, it is part of the rate just to get locked in.