How much usually is point cost for home loan and how much would it buy down my %?
My loan amount is 175K , 30yr fixed
1). How much would each point cost me for the above loan ?
2). How much of a % would it cut down when I pay the points upfront ?
3). Is it worth buying 2-3 points if I am planning to stay in that house for 5-7 years for sure ?
Tags: Cost, Down, home, Home Loan, loan, Much, point, Usually, Would
The lender would love you to pay points. It is actually a prepayment penalty in disguise to make you think you are getting a better deal than you are.
Depending upon the specifics there might be a tax deduction advantage to paying points up front. But whenever I calulated total $ interest over the full term of the loan, points plus discounted interest equaled applying point amount towards down payment for regular interest on resulting smaller loan. And if you pay off the loan early, you effectively paid more total interest if you paid points (since points are basically prepaid interest, or if rolled into the loan, increase your payoff amount).