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Valued Member
proton022
Posts: 39
Registered: ‎08-18-2011
0

negative points

I'm planning to buy a house now, and I expect to sell it off in 4/5 years. 

 

Would I be better off if I get a loan with negative points, i.e., I get credit from the bank while closing? If I get credit, then I'll have to pay extra interest, but I believe that interest is spread over the duration of the load. So, if I take a 30 yr loan but sell it off in 5 years, won't I acturally profit by choosing a loan with negative points? 

 

The opposite is true for positive points. That is, if I pay upfront, say 1 point, but sell my house in 5 years, then I'd lose in the end, because I don't benefit as much from a lower interest that I got.

 

Am I understanding this correctly?

Senior Contributor
Walt_K
Posts: 3,065
Registered: ‎11-02-2009
0

Re: negative points

Yes, you're understanding it correctly.  Of course, things change and maybe you end up staying longer than you thought.  But all you can do is make a decision based on the best information available to you.

 

Make sure you shop around as well.  I recently bought a new house.  The first 4 lenders I spoke with were all pretty close to each other at 4.0% for 30 year fixed with no points.  The bank I ended up going with gave me 3.75% for 30 year fixed with a .875% credit.  So by shopping around, you might be able to get the credit and a better interest rate. 


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Current Score: EQ 681 (04/05/13); TU 98 728 (01/06/12), TU 08? 760 (provided by Barclay 1/2/14), TU 04 728 (lender pull 01/12/12); EX 742 (lender pull 01/12/12)
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Valued Member
proton022
Posts: 39
Registered: ‎08-18-2011
0

Re: negative points

Walt_K

 

Great job on landing a good offer. Would you mind sharing the name of your lender? Please feel free to message me privately if mentioning lender's name would violate the forum rules.

Moderator
MarineVietVet
Posts: 14,911
Registered: ‎07-14-2009
0

Re: negative points


proton022 wrote:

Walt_K

 

Great job on landing a good offer. Would you mind sharing the name of your lender? Please feel free to message me privately if mentioning lender's name would violate the forum rules.



Lender names are just fine.

Senior Contributor
Walt_K
Posts: 3,065
Registered: ‎11-02-2009
0

Re: negative points

Eagle Bank.  It's a local bank in the Washington, DC area.  Not sure if they lend for properties outside this area, but can't hurt to ask.


Starting Score: ~500 (12/01/2008)
Current Score: EQ 681 (04/05/13); TU 98 728 (01/06/12), TU 08? 760 (provided by Barclay 1/2/14), TU 04 728 (lender pull 01/12/12); EX 742 (lender pull 01/12/12)
Goal Score: 720


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