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Puzzling Points
Question:
Which offers you the best deal, a low interest rate mortgage with "points" or a higher interest rate loan with no "points"?
Answer:
It depends. Consider a 30-year, fixed-rate mortgage for $100,000 at 8 3/4% interest and no points. Monthly principal and interest payments would $787. To qualify for an 8 1/4% loan, you have to pay three points, or $3,000. Payments on this loan would be $751, a savings of $36 per month. How can you determine which loan is best?
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First, calculate how long you will have to live in the home in order to recoup the $3,000 that you paid in points. Divide $3,000 by your monthly "savings" of $36, then divide that answer (approximately 83) by 12 months per year for the number of years it will take to recoup the points (approximately 7).
If you are fairly certain you will live in your new home for seven years or more, then the loan with points is the better value. Other factors may influence your decision, however, such as how much cash you have for closing and your monthly budget. Such calculations will give you the data you need to make a decision.
Remember, if you would like to be pre-approved for a mortgage
contact
Smitha and Rahul, they know
lenders that can meet your needs. This consultation/pre-approval is Free and
there is absolutely no obligation.
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Equal Housing Opportunity |
Smitha and Rahul Ramchandani
- The Townhouse Experts
Broker-Salesperson/Sales Representative | Keller Williams Towne Square Realty
55 Madison Ave - 4th Floor | Morristown, NJ 07960
Smitha Mobile: 973-953-7777 | Rahul Mobile: 973-615-6504
Office) 973-775-9646
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Site Last
Updated:
November 23, 2011 |
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Copyright Notice:
TheTownhouseExpert.com is a registered service mark. The information contained in this site is for general consumer use only. While all information is deemed reliable, it cannot be guaranteed. No portion may be copied or reproduced without the express written consent of Smitha and Rahul Ramchandani. All rights reserved. © 2006. By submitting your telephone number anywhere on this website you are consenting for Smitha and Rahul Ramchandani and their authorized representatives to contact you even if your name is on the Federal "Do-not-call List." Each office independently owned and operated. Each office independently owned and operated.
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