August 5th, 2020 9:13 AM by Don Spears
Do you plan on keeping your loan for a while? Then it may make sense to "buy" a lower interest rate by paying one or more "points."
Even if you don't know how long you'll keep your mortgage or refinance, it may make sense to buy points now to get a lower interest rate. For example, do you have a high-paying job now but you think you might change careers in the next few years? We can help you sort it out. It's part of our goal to find you the right loan for your means and future.
A point -- which equals one percent (1%) of the total loan amount -- is an up-front fee that lowers your annual interest rate and total interest due over the life of your loan. So, a one point loan will have a lower interest rate than a no point loan. Basically, when you pay points now, you save yourself from having to do it later. You can even pay fractions of points, meaning there are a lot of points packages to work with your specific needs.
There are a variety of rate and point combinations available. When you look at different loan programs, compare the package as a whole, rather than looking solely at the rates. Federal law requires lenders to publish their loans' Annual Percentage Rate, or A.P.R. The A.P.R. is a tool used to compare different terms, points, and offered rates.