Question

when is it a good idea to purchase discount points on a mortgage?

Answer 1

can anyone give me an example

Answer 2

you purchase points to lower the interest rate

Answer 3

so it's basically placing a larger down payment (in a way)

Answer 4

it's only a good idea if you can afford it

obviously you can't pay off the entire mortgage at once, but the more points you buy, the lower the interest (which leads to lower monthly payments)

Answer 5

so like if it was going to take me a long time to pay off a house it would be better to buy points if i could?

Answer 6

if you had more money up front, you could use it to lower the interest rate

that way, you don't pay as much interest over time (and have lower monthly payments since you have less interest to pay down)

Answer 7

there's a trade off really

if you have money now, you don't pay over the long run

if you don't have the money to buy points, you pay more over the long run

Answer 8

Oh! okay i think i get it much better now thank you. :)

Answer 9

you're welcome