Here’s what buyers need to know about discount points in this market.
If you’ve been paying attention to the news, you probably know that interest rates have increased recently. The higher your mortgage rate, the higher your monthly payment will be, so what can you do? Fortunately, there’s an easy way to lower your mortgage rate, and it’s by buying discount points.
Right now, many sellers are willing to pay some of their buyer’s costs to secure the sale of their home. You may be able to negotiate a deal where your seller helps you pay for your discount points.
We recently worked with a buyer who was able to lower their mortgage rate by 0.75% by buying two discount points. Typically, a discount point costs about 1% of the loan amount. On a $400,000 mortgage, lowering the rate by 0.75% would save about $250 a month, which adds up to $3,000 a year and $90,000 over a 30-year fixed-rate mortgage.
Contact your local lender to learn more about their discount point options. As always, call or email us with any questions. We are always willing to help!
