Should I pay points on a Mortgage?
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- Опубліковано 26 вер 2024
- In this video, I talk and answer this very common and million-dollar question Should I pay points on a mortgage. What are mortgage points? Is it good or bad?
How do we get or earn mortgage points or when do mortgage points make sense? All this I'm going to discuss to give you an idea of how mortgage points work. Watch the video to see what I mean. Like, comment, subscribe, and share this with a friend!
I love real estate and everything that has to do with real estate investing mortgage, and personal finance. If you enjoyed this video and found value, please consider subscribing!
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It makes more sense now why people should not always buy down points because law of diminishing returns! Pay up front to save a small amount monthly, some people would lose leverage. Basically an extra payment.
I don't understand how buying one point moves the rate between .125 and .25.
Also, looking at an amortization calculator for the example for the par interest rate, 30 years with a $400k loan. If I stay for the life of the loan I would pay $187K give or take in interest payment. To pay the interest up front or to buy interest rate to zero is crazy because my opportunity to leverage other markets or to buy another property might is gone. You are right more than likely even if it is your forever home, you will refi within 5 to 7 years.
Good one !
Thank you! Cheers!
I paid 0.25 points and complained that it was the mortgage broker's fault that we were late in June 2021. I gave up pretty quickly because I just wanted to close. Theory is I could wait just a year and refi again at a lower rate for free like 1.75% instead of paying points so I felt pretty dumb at the time. As of June 2022, 1.75% doesn't seem like it is happening anytime in the next decade or ever.
.25 points for what was probably an amazing rate. live and learn
Great video. Love the visuals
Glad you like them!
I loved this video. Thanks!
Thanks ! Glad you enjoyed it!
I'm more interested in my lower monthly Payments on a home under 400K? I have 20k in the bank, or would I save more on building my home, I have an acre of land too
So maybe you want to pay points and lower your payment
Amazing video. Very well done!
Thank you very much!
This video was helpful. I was debating on refinancing, I was given a rate of 2.85 with points however now I'm at a 3.375 currently and not sure I will be in the house over 5 years. I'm thinking I will stay with my current mortgage.
Based on that info probably not worth it. Shoot me a copy of loan estimate to Matt@MattTheMortgageGuy.com
Happy to review and give you honest advice
jealous of you lol
Hi, your video was so helpful, is it okay to send you my current estimation and tell me what you think is best to do? Using point or not?
Yes please! Send to matt@mtmg.com
Do you have a video like this for the current rates 2023.? If not can you do one😊 I’m new to your channel
I can do a new one but it’s the concept that’s important, not the specific rate stack. Cause it’s going to be different on every loan
@@MattTheMortgageGuy okay thank you!! I totally agree 😌 Thanks for explaining that
Pay off or pay down points up front or lower interest rate, like 6.375 to 5.99%? There can be a refi in the future.
I watched you on Mrs. Shaheedah Hill Video on" Do You pay Higher Rates Base on Mortgage Lender Pay".....Can you do the same video with Principal and Interest under the NACA Program....Thank You Matt.
Decimal
I do have a 600 credit score and I was told that I would have to pay $12,758 for points… I was told that this is a must because of my credit score, is that for real or I have to shop for another lender?
Could very well be the case with that score.
thank yhu
Is that on top of down payment & closing cost?
Yes
Great teaching tool on the white board. The swooshes and dings are a little annoying when you are trying to learn but good vid.
Me thinky no too
Matt if you have a high DTI and lower credit score. Is it a must that you pay points?
not necessarily
At what time frame do you say the break even point makes it worth it? Scenario, 15yr $505k @ 2.75 PAR, able to buy down to 2.0% with a break even of 6.42yrs. Planning on staying put and not refinancing again. Other buy down options are,
2.625 = 4.8yrs
2.5 = 6.05
2.375 = 6.07
2.25 = 6.05
2.125 = 6.11
Is it worth it?
That’s a tough one because it’s todays dollars to save on future payments . I’d ask yourself what is more important to you? The money today or monthly payment . And will you FOR SURE be in house AND same mortgage in 7-8 years
Avg home owner stays put for 5.5 years (+/-) so I’m using that as a gauge for breaking even.
But I’m also going to attack the principal like it’s eating my right arm!!
Our lender locked us at a rate, where we need to buy 1.329 points for 9.6k. I computer that we will break even in 5 years. The difference in monthly payment will be $173 a month. Does this make sense?
I bought a rental property through a mortgage company i didnt like the process.i had to buy 1point to get 3.5% interest rate. Plus I put down 25% in 2021ill go hard next. Why do hard money lenders don't report to the credit bureau? If I buy a rental with a hardmoney lender do I still have to wait 6 months to buy a single family house to live in using a mortgage broker?
Standard rate is 2.99% you just got robbed by a lender is all.
Standard rate for an investment loan?
@@keithmorton6925 Mortgage rates are different for owner occupants and investment properties. The rate he was quoted sounds like a reasonable spread above the standard rate you listed.
If we are taking an equity line of credit are we able to do this as well ?
Question Matt. If I put an offer on a home for 550k and the contract says I will pay 15K appraisal if it comes in over 540K. Let's say if the appraisal comes in at 530K... what happens?
If you agree to pay "up to $15k over" to $550k then $540k appraisal means you pay $550k. $530k appraisal means you will pay up to $545k.
So painful to watch rn
😂
Paying points is garbage ..the bank gets the money faster
What about the case where 1 point saves you $400/mo but only costs $4,000. The bank gets that $4k upfront but you break even after 10months
Decimal no points
How the heck this makes sense??? You say one point meant 1 percent? So if apr 3.6% and me paying one point that should bring interest rate to 2.6 % how me paying 3.5 points brings rate down .50% ??
1% of the loan amount is what 1 point equals. meaning paying 1 point on $300k loan costs $3,000. Likely only moves rate .125%-.25%
@@MattTheMortgageGuy 1% is 3000
2.5% means 7500 ? 3.5% original $10500
@@laythywbas - COST of 1 point = 1% of LOAN AMOUNT... Seperate this from the rate on the loan. they are 2 different things. Here is an example. $300k loan is 3.5%, paying 1 point ($3k) you can buy rate down to 3.25%, paying 2 points ($6k) you can buy down to 3%, 3 points ($9) the rate is now 2.75%... rough numbers and its not always same cost for each incremental change but that is how it works
@Matt the Mortgage Guy so one point is 0.25% not 1%!!
It's not separate from loan rate !! Loan rate is 3.5 % and you say one point is equa to 1 % of the same loan which is $3000 ?? what is not the same here ??
Hi I need your help if possible .
Our current mortgage - $250k
Estimate came back at $500-
We notice that the loan goes up to 407k
But only getting $116 cash out . Fha fees- but there’s also a $4k for borrower discount for 1 point . I don’t understand why I have to pay 4K . This was her response
Yes that is what is the origination .. I had told you this is what my company charges .. if I raise the rate I can make rebate but I don’t do that I do it at no charge to buyer ..
Could I possibly forward you the estimate received . Thanks .
Thank you hope you can help me .
Sure. Send it over to matt@mtmg.com
First question to answer is if fha is best choice or conventional. Much less fees on conventional
Good morning , sending it over now .
Yes , I would prefer for it to be conventional so I could get rid of my pmi.
But not sure why I am not being Offered that option.
Hello Matt. The seller needs to move out in August. If I get my offer accepted this coming week can I get a 3% rate right now locked or do I have to wait until August to get the rate locked?
Do a 60day lock. Depending on credit and down payment you should be able to get 3% or lower…
Watch out for subject to seller finding suitable housing listings. Plenty of times in the past the seller walked away meanwhile you could have been looking at homes. However, if you can wait go for it.
@@chrleslynch394 I hate this in listings as well. It's a seller market I understand but their was a seller who told a friend of mine he was moving within 3 months 😂
Ask the seller to close on the sale immediately and then rent the house back from you until August. If he doesn’t want to do it then he is not really sure if he will sell and you might wait in vain while interest rate skyrocket!
Nice! Well explained so that even I could understand!🤣
Going into pre-drywall and the builder wants to know who is funding.
This I can use!! Sleepless nights are a thing of the past now thanks to you. 🫡
Glad you enjoyed it!
Our first house we paid points I dont remember if we did with our second home but our current home we did not pay any points thanks for this video
Thanks for watching!