Paying Discount Points on Your Mortgage

Mortgage interest rates are unusually low right now, close to all-time lows for a 30-year fixed rate loan. So with rates already so low, is it worth paying points to try to get the rate even lower?

If you're thinking about buying a home or refinancing your current mortgage, you're probably at least somewhat familiar with points. Basically, paying points allows you to get a lower interest rate. In essence, you're paying some of the interest up front, so you don't have to pay as much over the life of the loan.

It's a fairly straightforward concept, but one that can be confusing for a lot of borrowers. Part of this is because mortgages can be fairly complex transactions, with a lot of other fees and terminology involved, and points are just another thing to keep track of. But the bigger challenge tends to knowing whether or not it's worthwhile to pay for points in the first place.

A point one percentage point - that's where the name comes from. When you take out a mortgage, either to purchase or refinance, each point you buy costs you 1 percent of the loan total - or $10 per $1,000 of the mortgage value. In return, each point you pay reduces your interest rate by a certain amount - usually 1/8th of a percent, but that can vary from lender to lender.

Center State Mortgage is your #1 mortgage broker with the lowest interest rates in Straten Island and New Jersey! Rely on them to make sure getting a new home is fast and easy! Choose Center State Mortgage for all your home loan needs!