Bux-Mont Real Estate and More: November 2017

What are points when getting a mortgage?

  1.  What are points when getting a mortgage?

A. Mortgage points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called “buying down the rate,” which can lower your monthly mortgage payments. One point costs 1 percent of your mortgage amount (or $1,000 for every $100,000).

It is important to consider how long it takes to recoup the cost of buying points. This is called the break-even period. To calculate it, divide the cost of the points by how much you save on your monthly payment. The resulting number is how long it takes for the monthly payment savings to equal the cost of the points.

If you don’t anticipate being the house very long, it may not make sense to pay down the interest rate. You will want to be sure to exceed the break even point before you sell the home or refinance the mortgage.

Another consideration is how much cash it will take to pay points. Is there enough to cover the down payment, closing cost and lender reserves?

The terms around buying points can vary greatly from lender to lender. Here are some important things to consider:

  •  The interest rate reduction you receive for buying points is not set and depends on the lender and the marketplace. Shop around.

 

  •  Buying points may give you a tax benefit. Check with your tax advisor.

 

  •  Points for adjustable-rate mortgages (ARMs) typically provide a discount on the loan’s interest rate only during the initial fixed-rate period. Run the numbers to ensure that your break-even point occurs well before the fixed-rate period expires.

 

If you enjoy reading our blog, please SUBSCRIBE.

The Scott Loper Team

Scott & Lisa Loper

Scott Loper Team at Keller Williams Real Estate

 

What are points when getting a mortgage?
share
What are points when getting a mortgage? A. Mortgage points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called “buying down the rate, ” which can lower your… more
Beautiful Single Family Home in Montgomery Township
share
218 Hemlock Drive, North Wales, PA 19454 Asking Price: $329, 900 MLS#: 7089291 For a Virtual Tour of 218 Hemlock Dr Beautifully maintained home on a large peaceful lot and quiet street in Montgomery Township. Enter into an open foyer that steps up… more
Getting Married? Register for a House!
share
Getting Married? Register for a House! The classic American Dream is love, marriage, house and family. Practical parents of engaged couples sometimes lament, “Why don’t you just go elope? Save the money and put it towards a house. ” Thanks to… more
Galvanized America Inn and Art Gallery
share
Galvanized America Inn and Art Gallery A beautifully renovated yet rustic 1750’s farmhouse with a magnificent 1800’s bank barn The idyllic setting where serenity and art abound The 1754 farmhouse sits on 6+ acres in the heart of Bucks County Enjoy… more
Solid Single Family Home on a Beautiful Lot in East Greenville
share
1401 Edgeview St, East Greenville, PA 18041 Asking Price: $219, 900 MLS#: 7085387 For a Virtual Tour of 1401 Edgeview St Solid single family home on a quiet street and beautiful ½ acre lot in Upper Perkiomen School District. ***New Septic System and… more
Meticulous Townhome in Desirable 55+ Community in Sellersville
share
112 Devonshire Way, Sellersville, PA 18960 Asking Price: $299, 000 MLS#: 7084820 For a Virtual Tour of 112 Devonshire Way Meticulous townhome in the very desirable 55+ community of Village at Dorchester. Gleaming hardwood floors extend from the… more
Am I Impacted by the Equifax Security Breach?
share
Am I Impacted by the Equifax Security Breach? Recently, Equifax, one of the three major credit reporting agencies, disclosed a massive security breach in which more than 143 million consumers may have had their information compromised, including:.. more
Vacant House Reminders
share
Vacant House Reminders It is that time of year when it is getting dark earlier, leaves are falling, and temperatures may drop below freezing at night. A couple suggestions through the marketing and settlement of your home: Have a light on a… more
News from The Scott Loper Team
share
News from The Scott Loper Team Scott Loper was named a 5-Star Real Estate agent in the September issue of Philadelphia Magazine for the 8th year in a row (and since inception of the award). For the 2nd year, Lisa was also named a 5-Star Real… more