What Are Mortgage Points?
Mortgage points, or discount points, are fees paid upfront to lower your interest rate. Each point typically costs 1% of your loan amount and reduces your rate by 0.25%.
1. Pros of Buying Mortgage Points
✔ Lower interest rates
✔ Reduced long-term interest costs
✔ Tax-deductible in some cases
2. Cons of Buying Mortgage Points
✖ Higher upfront cost
✖ May not be beneficial if you sell or refinance soon
3. How to Decide If Mortgage Points Are Worth It
Buying points makes sense if:
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You plan to stay in your home long-term
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You have the upfront cash available
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You want to reduce monthly payments over time
4. Alternatives to Buying Points
Instead of paying for points, you could:
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Use extra funds for a larger down payment
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Invest the money elsewhere for potential growth
Final Thoughts
Understanding mortgage points and whether you should buy them can help you make an informed decision. Weigh the upfront cost against potential long-term savings before committing.
Keyword Density: Understanding mortgage points: should you buy them
