Points Calculator
Should I Pay Points To Lower My Interest Rate? - Paying an up front fee to the lender, called "points" is a specific method of lowering your interest rate.
Typically 1 point costs 1% of the amount borrowed. If the amount borrowed was 100,000 then 1 point would cost you $1000 ( $100,000 x 1%) This
in turn will lower, or "buy down" your interest rate by .25%.
For example, if you only qualify for a 6.75% mortgage rate on a $100,000 loan, paying your broker $1000.00 up front can reduce the rate to 6.5%.
Determining if this is a smart move is directly related to how long you plan on
living in the house, and your cash availability at closing. The longer you plan on living in the house the more it makes sense to buy points to lower the interest rate. Don't asume it's always an unwise move to pay for points (as many will tell you! )
Go ahead! Crunch some numbers using our calculator below and get your own analysis!