Points:
What are Points? - Pay Points is when you pay the bank/lender for a lower interest rate. One point is equivalent to one percent of the loan amount. Mortgage points are considered by the IRS to be a form of pre-paid interest. This means that mortgage points can be deducted from taxable income. Most lenders require that a borrower pay one or two points at closing time in exchange for a lower mortgage rate (lender's APR would stay the same).
How will it lower my mortgage payment? - By paying points, you will get a lower interest rate which will give you a lower monthly payment. This is good if you are going to have the mortgage for a long time. If you think that you will move and/or refinance within 10 years, then points will NOT be to your advantage in the long run.
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