When you get a home loan, you may pay two different types of points: origination points and discount points. Each point is equivalent to 1 percent of your loan amount, so one point on a $150,000 mortgage is $1,500.
Always pay attention to advertised loan rates, as most show an interest rate based on the purchase of a certain number of discount points, which must be paid at closing.
If you have the option to pay discount points, there are two factors to consider before making your decision.
First, consider how long you plan to live in the house. The longer you stay, the more purchasing discount points will save you. You would need to remain in the home for 63 months to break even on this investment, or just over five years.
You should also consider how much cash you have to pay points. Many buyers struggle to afford their down payment and closing costs, so paying extra points is not always an option.
While some mortgage experts say that the cash you would spend on discount points should be used instead to invest in something with a better return, most homebuyers just want a home loan they can afford. Homeowners usually buy a home for pride of ownership and a stable place to live, not as an investment. After all, even if your home increases substantially in value, you will still need a place to live, and nearby homes will likely have gone up in price, too.
If you plan to live in your home for a long time and you want the lowest payment possible, buying mortgage points is often worth the cost.
Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:
An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020