Paying points 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.
If you’re seeking the lowest possible rate then a 30 year fixed rate mortgage with points may be your best option.
Who Should Pay Points?
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.
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.
Whether purchasing or refinancing, we can help you determine whether there is a cost benefit to paying points.