If you’re shopping for a mortgage, you’ve probably seen the term “points” come up. Mortgage points can lower your interest rate, but they’re not always the right move. Here’s how they work and how to decide if buying points makes sense for you.
What Are Mortgage Points?
One mortgage point, also called a discount point, typically costs 1% of your loan amount and lowers your interest rate by about 0.25%. So on a $350,000 loan, one point would cost $3,500 upfront in exchange for a lower rate over the life of the loan.
How Do You Know If It’s Worth It?
The key question is your break-even point, meaning how long it takes for your monthly savings to cover the upfront cost. If you plan to stay in the home well past that break-even point, buying points can save you real money. If you might sell or refinance within a few years, the upfront cost may not pay off.
Things to Consider
- How long you plan to stay in the home
- Whether you have the extra cash at closing without draining your reserves
- Your other financial priorities, like paying down debt or building savings
- Current market rates and where they may be headed
Every buyer’s situation on the Space Coast looks different, and the math changes with the loan amount and rate environment. Jesse Griffith can run the numbers for your specific scenario and show you exactly what buying points would mean for your monthly payment and long-term costs. Call or text 321-501-9579 to talk through your options.