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Mortgage Refinancing: What are Points and Should You Pay Them for a Better Mortgage Rate
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By Louie Latour

Discount points are a fee you pay at closing in exchange for a better interest rate. Deciding whether or not to pay this fee depends how much you will have to pay and what the potential savings are over the life of the mortgage. Here are tips to help you evaluate whether paying points is in your best interest.

The main advantage of paying discount points if you plan on staying in your home for a long time is that you will recoup this expense by qualifying for a lower interest rate. If you plan on staying in your home for a short time, you will most likely not recoup your expenses from paying points.

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A point, also called a discount point, is a fee paid at closing in exchange for a better mortgage interest rate. One discount point is 1% of the loan amount. Paying one point typically reduces the interest rate by

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This entry was posted on Tuesday, August 29th, 2006 at 5:53 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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