Is It A Good Idea To Pay Points On A Mortgage

MRR and PLR Articles Pack

Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.

AI Generated Image

Is It a Good Idea to Pay Points on a Mortgage?


Summary:

When closing a mortgage, you have various options, including the choice to pay points to reduce the interest rate. Here's what you need to know to decide if paying points is right for you.

Understanding Mortgage Points


A mortgage point equals 1% of the total loan amount. For instance, on a $150,000 mortgage, a point costs $1,500. Reducing the interest rate by 1% typically requires 8 points, meaning each point lowers the interest rate by 0.125%. Even a single point can offer savings.

When Paying Points Makes Sense


Paying points at closing can lower your interest rate and monthly payments, but it doesn't benefit everyone. It's generally advantageous if you plan to stay in your home for several years.

Example:

Consider a $100,000 mortgage at 7.5% interest with a $700 monthly payment. If you buy one point for $1,000, the interest drops to 7.375%, reducing your payment to about $691. The $9 monthly savings means it will take 111 months (or about 9 years and 3 months) to break even.

Therefore, staying in your home for a significant time is crucial to realize savings from paying points.

Alternatives if You Plan to Move Sooner


If you don’t plan to stay long, consider other ways to save:
- Pay a larger down payment.
- Maintain a low total debt and a high credit score.
- Increase your monthly payments.

Use online mortgage calculators to compare these strategies and determine what suits you best.

Shopping for the Best Mortgage Offer


When shopping for a mortgage, gather multiple quotes from different lenders. Compare them based on:
- Interest rates
- Fees
- Total cost
- Available options

Careful comparison can help you choose the best offer, potentially saving thousands over the life of your mortgage.

You can find the original non-AI version of this article here: Is It A Good Idea To Pay Points On A Mortgage .

You can browse and read all the articles for free. If you want to use them and get PLR and MRR rights, you need to buy the pack. Learn more about this pack of over 100 000 MRR and PLR articles.

“MRR and PLR Article Pack Is Ready For You To Have Your Very Own Article Selling Business. All articles in this pack come with MRR (Master Resale Rights) and PLR (Private Label Rights). Learn more about this pack of over 100 000 MRR and PLR articles.”