What are mortgage discount points and should I pay them?

When paying points you are basically buying down your interest. The points flucuate on a daily basis and a par is at 100 (no points) 99 will get you a lower interest rate but you will pay for it. 101 will get you a higher interest rate but your lender will be able to credit back money towards closing costs (not down payment). I always suggest it on refinance because there is no out of pocket. For purchases it will depend on available funds of the borrower, it typically will always be beneficial over the life of the loan, but how long do you plan to keep the house and the loan is the deciding factor. I am able to do loans in all 50 states. If you'd like to discuss further or get pre-approved to buy feel free to reach out to me. 208-818-3768 or abyrd@goldwaterbank.comNMLS 1117336

Discount (and origination) fees effectively are "buying" the mortgage rate down. You should look at what that cost is vs. how much it saves you per month in payment by lowering the rate. Because most buyers don't keep their house or refinance about every 6-7 years unless you will own the house long enough to get the benefit in my opinion it is not worth paying the extra. Each $1000 more you put as a downpayment only changes your payment about $5 so in many cases you may be better off haning onto the extra cash and paying off another debt or being able to pay cash for something you need for the house (lawnmower, ladder, window treatments, etc.) Good luck!

Discount points are exactly that.. a point (1% of the loan amount) is paid to lower (discount) the interest rate charged on the loan.. But don't confuse a discount point with origination points.. they are both based on a percentage of the loan amount, but an origination point is charged by your lender as a fee to originate your loan. I been doing this for a very long time, and I never advise my borrowers to pay points to lower the rate.. the cost vs. benefit/payback period is too long to make it worth while. The only time I've ever seen it beneficial, is when the seller has contributed to your closing costs and you have monies left over and unless you use it to pay for something (like discount points), you lose it.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Discount points are used to adjust your interest rate lower. they do not affect your down payment.

Discount points are basically upfront money you pay today to lower your interest rate. Everyday, as interest rates change, there is always a "sweet spot" where the average person gets the most bank for their buck. But above and beyond that, there are many other considerations. What will you save? How much does it cost upfront? What is the break even period? Will you be there long enough to see any benefit? Do you comfortable have the money today to pay discount points?

Actual "Discount Points" are those that are used to obtain a lower interest rate, so don't confuse this with Origination Points, as those are for the loan origination company's profit for handling your loan. You need to do some math calculations to make sure that paying a 1% discount actually has enough of a benefit to you, but I'd say it won't as the rate offered is not likely to be more than .125% or .25% at best. If you plan to sell or even refinance the property in the short term, you will never break even! Review all of your options with your mortgage professional to determine what is best for you! Best of luck!

Hi WendellWhy don't you give me a call. I can answer all your questions. My office is in Cherry Hill NJ856 324 3608