Is Paying Mortgage Points Ever a Good Idea?

[{"selector":"#anim-ed647026-81c5-463d-8933-c6afb26b3376","keyframes":{"opacity":[0,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-30856af9-a00c-4683-8c87-857e58bb0f39","keyframes":{"transform":["scale(0.3333333333333333)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] Learn more

[{"selector":"#anim-57f3e993-a1b8-4068-9869-1bd467c2cfbf","keyframes":{"opacity":[0,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-c68f46dc-3a15-458d-bc58-1c7276f7893b","keyframes":{"transform":["scale(0.3333333333333333)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] 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. Learn more

[{"selector":"#anim-5362a532-7bb2-4186-a1ec-1f5d35077f94","keyframes":{"opacity":[0,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-0bb71360-496d-49f5-8f64-72d6f18e270a","keyframes":{"transform":["scale(0.3333333333333333)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] 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. Medium Brush Stroke Learn more

[{"selector":"#anim-2bc8e0fa-02fa-4615-8db4-8b999bc5d23f","keyframes":{"opacity":[0,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-e77b9a64-352b-4e0e-a360-8cd08c5dd3f7","keyframes":{"transform":["scale(0.3333333333333333)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] Paying points can help you get the best deal possible on your next new home. Learn more

1. Why Mortgage Points Can Help Home Buyers

[{"selector":"#anim-01d687e4-e3dc-4c26-a2e4-ea88deb6ca43","keyframes":{"opacity":[0,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-3e5412a1-dcf7-4879-bec7-b5ca363a4540","keyframes":{"transform":["scale(0.3333333333333333)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] 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. Learn more

2. How Much Home Buyers Pay for Mortgage Points

[{"selector":"#anim-bb79368d-7145-4a77-8e58-cf88952060a6","keyframes":{"opacity":[0,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-d21eaf95-9900-4283-9b17-70346b7ed5d7","keyframes":{"transform":["scale(0.3333333333333333)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] 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. Learn more

Most homebuyers who opt for points buy between one and three and have the option to purchase fractions of points. However, the challenge for buyers is that lenders typically require you to pay points up front.

3. The Pros of Paying Mortgage Points

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When you get an APR discount that allows you to break even, paying points is worth it. More about breaking even in a moment.

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