If you’re shopping for a home mortgage, you’ve probably seen the term “mortgage points.” Before you take the next step to sign a mortgage preapproval or other borrowing commitment.
Taking out a mortgage is a big financial decision, so don’t miss the opportunity to take advantage of mortgage points when it’s wise for your situation.
Paying points can help you get the best deal possible on your next new home.
Mortgage points, also known as discount points, reduce the interest rate you pay on a home loan. While you must pay them upfront, they typically save money over time.
One mortgage point typically costs 1% of your home loan amount. So, if you want to borrow $300,000 to buy a property, one mortgage point would cost $3,000.
As I mentioned, paying a few thousand dollars upfront can save tens of thousands of dollars in the long run.