Video Transcript
Should you pay discount points on your upcoming mortgage? Last year, buyers paid an average of 0.936% in discount points on their mortgages. That's $936 for every $100,000 borrowed. That gave them access to lower mortgage rates than what buyers would otherwise qualify for. But when mortgage rates are down, as they have been this month, paying points can be a bad use of money because points are sunk costs. You don't get them back. If you refinance in the future, you don't get to recoup but they are your guarantee for lower rates today versus you don't pay points and you wait to potentially refinance at some point in the future. So what should you do? We have more on the site about discount points and how to handle situations like this. I'm Dan with Homebuyer.com. Happy homebuying.
Paying Discount Points When Mortgage Rates Are Falling
Paying discount points for lower mortgage rates may not be advisable when rates are falling. Last year, buyers averaged 0.936% in discount points, costing $936 per $100,000 borrowed, but points are sunk costs that are not recouped if refinancing occurs.
Video Transcript
Should you pay discount points on your upcoming mortgage? Last year, buyers paid an average of 0.936% in discount points on their mortgages. That's $936 for every $100,000 borrowed. That gave them access to lower mortgage rates than what buyers would otherwise qualify for. But when mortgage rates are down, as they have been this month, paying points can be a bad use of money because points are sunk costs. You don't get them back. If you refinance in the future, you don't get to recoup but they are your guarantee for lower rates today versus you don't pay points and you wait to potentially refinance at some point in the future. So what should you do? We have more on the site about discount points and how to handle situations like this. I'm Dan with Homebuyer.com. Happy homebuying.
