|
Home Mortgage Refinance Loan - Mortgage Refinancing - Trade Points for a Lower Mortgage Interest Rate Nearly every mortgage lender could trade points for better terms or a lower interest rate. Whether or not paying points is in your best interest is another story. Here are several tips to help you decide if paying points at the time mortgage refinancing is worthwhile for you. The decision to pay points at the time mortgage refinancing primarily depends on how long you could be keeping your home. If you stay in your home for at least 5 years you could benefit from paying points for a lower mortgage rate. Here is a particular example to illustrate how points save you money. Suppose you’re considering mortgage refinancing for $100,000 including the lender quotes you a particular interest rate of 8.0% with zero points because you’ve had credit problems in the past. By paying 3 points at closing (one point=1% pertaining to the loan amount), you could qualify for a 6.75% mortgage rate. Your monthly payment at 8.0% will be $733 per month, including at 6.75% you will pay $648 per month. the results in a savings of $85 per month; it could take you 35 months to recoup the $3,000 you will be required to pay at closing. The previous example illustrates how paying points at closing might be beneficial for homeowners with poor credit. Whether or not paying points is right for you depends on your financial situation. Don’t rely on your loan representative to recommend if paying points makes sense as a greedy loan representative could direct you to the loan option that yields the largest commission. Never ask your mortgage representative, “Which loan is best?” Instead, ask to see the rate sheet that shows your options with including without points so the 2 of you might work through the numbers. You might learn more regarding your mortgage refinancing options, including costly mistakes to avoid by registering for a free mortgagee tutorial.
Click here to get Refinanced >> |