15 Year Fixed Rate Mortgage with Points
When you choose a 15 year fixed rate mortgage with points, rather than the typical 30 year, you benefit from a lower rate, a chance to build more equity and less interest overall. When you are paying points, this means buying down the interest rate. Some companies call it “discount points” while others call it “origination fees.” Either way you are paying to get the lowest possible rate for your mortgage.
Who should pay points?
For refinancing your mortgage:
If you are refinancing and plan on keeping the mortgage for the entire term of the loan then it may make sense to pay points as you will end up saving more in interest over the life of the mortgage.
For buying a home:
If you are purchasing a home and know for certain that you will keep the mortgage for the entire term and have the extra money to bring to the closing table than it makes sense to pay points to buy down the rate.
If you have the money and plan on keeping the mortgage for a long time then it makes perfect sense to pay additional fees to get the lowest possible rate. Let us analyze your situation and determine what option best fits your needs, because a low rate by itself does not necessarily mean a better deal.
When it comes to getting a mortgage
you have more options than you think