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Mortgage & Points Question

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Anonymous
Not applicable

Re: Mortgage & Points Question

Wow, thank you all for the great responses.  I guess that this being my first time, Im a little naive to the whole process.  I just have trouble understanding what other factors should come into play with a lender.  I thought it was a little more straightforward (ie. give me a loan for $xyz, I'll pay you back $xyz every month).  Lol...I know thats perhaps an oversimplification, but still.
Message 11 of 14
eyesopen
Valued Member

Re: Mortgage & Points Question

I'm researching mortgages for the first time too - what do you mean by this statement? Can you please explain further? Thank you.

 

"...They said most people refinance frequently, and that not one of them had a mortgage over 7 years old, and most were under 5 years - so a point buy down, especially with today's low interest rates (different story when rates were 7%+ and a point buy down was worth more %). "


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Message 12 of 14
Anonymous
Not applicable

Re: Mortgage & Points Question

I believe what theyre saying is that paying points upfront to lower your interest rate (APR) doesn't make sense unless you plan on keeping that same mortgage for the entire (30 yr) life.  If you refinance at 5 years, then the money you spent upfront to lower your interest waste was essentially a waste.  Thats at least how I took it Smiley Happy
Message 13 of 14
Anonymous
Not applicable

Re: Mortgage & Points Question

That is exaclt what they mean.  For example putting 2K down to save 50 per month would take you 40 months to break even.  Then you look at your other expenses in life (high interest CC, etc)  is it really worth it for that given how much you would save paying off the CC or haveing some extra reserves for emergencies, etc.  Given people's habits nowadays of doing a refi every 4-5 years it may not be worth it and shoudl definitley be looked at seriously before pluncking down cash to save a few $ per month.
Message 14 of 14
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