logo
303-256-5748
  • Home
  • Home Purchase
  • Refinance
  • Apply
  • Resources
    • Loan Programs
    • Loan Process
    • Mortgage Basics
    • Mortgage Calculators
    • Online Forms
  • About
    • Licenses
    • Ask the Expert
    • Newspaper Articles By Spierings
    • Rent vs. Buy
    • Testimonials
  • FAQ
  • VA Loans
  • Reverse
  • Contact

Buying Mortgage Points: Is It Worth It?

Buying mortgage points is a way to secure a lower interest rate during the home buying process. It can save you several thousands of dollars in interest over the life of the loan and lower your monthly mortgage payment. Check out this nifty guide to learn how they’re calculated so you can assess if purchasing mortgage points makes sense for your situation.

Mortgage Points: What are they?

Mortgage points, also known as discount points, are fees you pay your lender to reduce your interest rate when you purchase homes or refinance. You’ll give your mortgage lender cash upfront to reduce your interest rate for the life of the loan. 

Should You Buy Discount Points?

If you have the budget for buying points, the decision often comes down to whether you’ll have the loan long enough to pass the “break-even point.”  

The concept of the break-even point is easy to understand: 

The break-even point is when the upfront fee equals the accumulated monthly savings. So let’s say that you paid $4,000 in upfront mortgage point fees, and that amount translated to $59.70 in interest savings per month. $4000 divided by $59.70 equals 67. 

That means it will take 67 months to recoup the money you paid for the points. After that, you’ll come out ahead. 

So if you selling the home or refinancing the mortgage before it hits break-even, you’ll lose cash on the mortgage points you bought.

The break-even point differs, depending on the loan’s size, term, and interest rate. However, it usually takes more than just two or three years to reach it. 

Is Buying Discount Points Worth It?

Most buyers make large down payments or pay extra monthly to build equity quickly and pay off mortgages earlier. 

If you can’t apply the above strategy, buying discount points is an excellent option. Here, we share a list of when buying points are worth considering:

  • When you don’t qualify for the lowest interest rates because of a low credit score.

  • If you want the upfront tax deduction and have extra cash to put down.

  • You need to reduce your monthly interest cost to reduce your monthly mortgage payment.

  • You plan to keep your house for more than 5 years, giving your time to regain the cost. 

Is Negotiating Points on a Mortgage Possible?

Generally speaking, the answer is yes. In most cases, mortgage professionals have the discretion to negotiate mortgage points. In fact, sometimes mortgage points are included in a quoted rate even if you didn’t request it. 

Many factors in mortgage lending are variable (to a degree), and mortgage professionals use their expertise to find just the right mix for each particular situation and borrower. 

Is Buying Mortgage Points the Right Choice for You?

Purchasing mortgage points makes sense since it can reduce the overall cost of your loan.

If you’re still having a hard time deciding, don’t worry, you don’t have to crunch the numbers on your own. If you need help determining if buying mortgage points is right for you, our mortgage advisors will happily lend a hand. Give us a call or send us a message on our site today.


* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.

Disclaimer

Randy Spierings. Branch Manager. PRMI NMLS 3094. Branch NMLS 1192790. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. 

Colorado- Regulated by the Division of Real Estate

California- Licensed by the Department of Financial Protection and Innovation (DFPI) under the California Residential Mortgage Lending Act 4130403. A copy of our Privacy Policy and Notice is accessible by going to Primary Residential Mortgage’s website and clicking on the “Privacy Policy” link located at the bottom of the page. https://www.primeres.com/privacy-policy 

Florida- Florida Office of Financial Regulation MLD646. 

Idaho- Idaho Department of Finance, #MBL-1703. 

Texas- This office is licensed and examined by the Office of Consumer Credit Commissioner of the State of Texas.

Washington- Department of Financial Institutions CL-3094 (http://nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/3094). 

Terms of Use | Privacy Policy | Site Map | Consumer Voice

Sample Image

Connect

Contact Us

Address: 383 Inverness Parkway, Suite 410 Englewood, CO 80112

Phone: 303-256-5748
Cell : 303-521-3682
Fax: 303-380-3350

Email: rspierings@primeres.com

NMLS# 3094

LenderHomePage Footer Logo Powered By LenderHomePage.com

Primary Residential Mortgage, Inc. Accessibility Statement

General

Primary Residential Mortgage, Inc. strives to ensure that its services are accessible to people with disabilities. Primary Residential Mortgage, Inc. has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.

Accessibility on Primary Residential Mortgage, Inc. website

Primary Residential Mortgage, Inc. makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows Www.bestcoloradomortgages.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).

Enabling the Accessibility Menu

Primary Residential Mortgage, Inc. accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.

Disclaimer

Primary Residential Mortgage, Inc. continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.

Despite our efforts to make all pages and content on Primary Residential Mortgage, Inc. website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.

Here For You

If you are experiencing difficulty with any content on Primary Residential Mortgage, Inc. website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.

Contact Us

If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: rspierings@primeres.com