A Brief Description Of Points And How They Can Be Paid!-ricky lee neely

Mortgage-Refinance The definition of a point would be the upfront fees that is paid by the borrower in order to obtain a better interest rate on the loan. To be precise one point is the one percent of the loan amount. It is a known fact that the lower interest rates means lower payments, what is important is that the period for which you need to be in the loan. This will help you in determining whether it would be worthwhile to pay the points while investing in the home loan. We can begin by looking at a sample example. If the mortgage amount that you have taken is somewhere about $300,000, then the point that you would have to pay would be somewhere about $3,000. This would be the amount that you would have to pay in order to lower your interest rate. What it translates into is that by paying this much point you would be saving a monthly amount of $50. This further means that it would take around 60 months to recover that point. This means that if you refinance or sell the home before the sixty month mark then your money would be lost. In such cases the only way in which you can benefit financially from the purchase is by staying in the house for at least the 60 month period. Another important point to be taken into consideration is that the interest rates run in cycles. When the rates are at the historical lows then it makes sense that you pay the points especially when you are planning to live for an extended period of time. There would not be any need to refinance if the rates are unlikely to go low in the near future. In case the interest rates are at a high then it is very much likely that they would be .ing low in the near future. Thus this is not the right time to pay the points. It is also very much likely that you would be opting for the refinancing and thus would not be staying in the loan for that much long. Another factor that plays a crucial role while paying the points is the tax deductibility. For any new purchase the interest from the points as well as the mortgage are tax deductible up front. In case of refinances the points are also non-deductible up-front. Instead the deductions are spread out over the period of the loan and thus the points be.e more costly. A lot of consideration needs to be given to the points whether they are a worthwhile investment or not. If you are a Wasington State first time home buyer or a first time home buyer Bothell then you must consult with an experienced mortgage professional who would guide you through the procedure. About the Author: 相关的主题文章: