Adding a couple points to pay for closing?

[dekelley1]

Has anyone heard of a lender adding a couple points to help pay for the closing cost? 

[Booner72]

Yes, we added .25 of a point and it saved us thousands.

[courtney091082]

So in the long run is there a big difference....sorry don't know much about how it works to add pts to cover closing. I plan on asking for full closing from the seller but you know how that goes, 50/50 shot I'm sure, so this would be a good option for me so I could save my closing money for extra expenses after moving in.

[dekelley1]

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@Booner72 wrote:
Yes, we added .25 of a point and it saved us thousands.

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That's great news!! thanks for your reply.  I'm trying to work on this deal and it's killing me.  I'm looking for options in every corner of the earth!!

[Anonymous]

Recommendation: You should NOT buy any points with your mortgage.

Here's why: Because your down payment is less than 20% of the purchase price, your lender will likely require you to purchase mortgage insurance (PMI) which would be an additional upfront cost for you. Rather than pay this additional cost, it would probably be better for you to not pay for points and instead use that money to increase your down payment. By increasing your down payment to the 20% level you can avoid the cost of PMI. 

http://www.bankrate.com/calculators/mortgages/mortgage-point-adviser.aspx

[Booner72]

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@dekelley1 wrote:

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@Booner72 wrote:
Yes, we added .25 of a point and it saved us thousands.

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That's great news!! thanks for your reply.  I'm trying to work on this deal and it's killing me.  I'm looking for options in every corner of the earth!!

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Our loan was 147K and another poster here told me we would pay 8K over the life of the loan for the 3'ish thousand we got in credits.  You will pay it back, like everything.

[Anonymous]

I'm doing the USDA Guaranteed so would getting credits back for closing be worth it since MI is only 3%. I know that with this loan I can also finance closing closts into the loan but the house would have to appraise for at least 3% under what the offer is for.

[JusdoNit]

It's up to you if you want to add the .25 and have a credit added to your closing.  Yes, it will cost you more in the long run, but so does all the other options.  You can pay it on the front (more cash upfront ) or back end (over the time of your loan).

All programs have their fees even if it's called something else (like a funding cost) in your GFE.  The good thing is you can always pay extra payments towards principle on your mortgage which will cut the cost of that credit received on the front end down over the life of your loan.

It's just what is more economical for you to achieve the goals you have set ahead.

Hope this helps or atleast gave you another option, if not Toss

[JusdoNit]

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@Booner72 wrote:

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@dekelley1 wrote:

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@Booner72 wrote:
Yes, we added .25 of a point and it saved us thousands.

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That's great news!! thanks for your reply.  I'm trying to work on this deal and it's killing me.  I'm looking for options in every corner of the earth!!

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Our loan was 147K and another poster here told me we would pay 8K over the life of the loan for the 3'ish thousand we got in credits.  You will pay it back, like everything.

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IT doesn't have to.  Just pay a little extra to priciple and you will cut the cost of that $3k way down from $8k

[JusdoNit]

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@Anonymous wrote:

Recommendation: You should NOT buy any points with your mortgage.

Here's why: Because your down payment is less than 20% of the purchase price, your lender will likely require you to purchase mortgage insurance (PMI) which would be an additional upfront cost for you. Rather than pay this additional cost, it would probably be better for you to not pay for points and instead use that money to increase your down payment. By increasing your down payment to the 20% level you can avoid the cost of PMI. 

http://www.bankrate.com/calculators/mortgages/mortgage-point-adviser.aspx

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Interesting point, but the only thing is that the credit won't even come close to that 20% down scenario in most cases.  The credit is not tens of thousands of dollars.  Yet,  it's always nice to have another option even if it may be far fetched for most. Thanks for the food for thought