When you choose a 15 year fixed rate mortgage, rather than the typical 30 year, you benefit from a lower rate, a chance to build more equity and less interest overall. Paying no points is typically one of the most common scenarios chosen by homeowners. Why?
It results in lower closing costs which benefits most homeowners. Most people don’t keep a mortgage for more than 5 to 7 years, so there is no point in having higher closing costs, because by the time you have recuperated the closing costs, you have either sold your house or refinanced the mortgage.
Who Shouldn’t Pay Points?
If you plan on selling your home in the near future (5 to 7 years) then it makes more sense to pay no discount points and go with a limited closing cost loan. Otherwise, by the time you recuperate the cost associated with your interest rate, you would have wasted your money/equity in your home.
If you have limited funds and don’t plan on retiring in your home, then you do not want to waste money in buying down the rate with discount points. You would probably rather opt-in for the lowest interest rate with limited closing costs and keep your money in the bank. We would be happy to answer any questions you have about a 15 year fixed rate mortgage.