People ask me all the time what are points should I pay points Well let explain what points are first of all. 1 point is 1% of the loan amount a $300,000 loan 1 point is $3,000. Doesn’t always work in exactly even numbers sometimes it’s .724 so it rarely is going to come up with a perfectly even number, now what do points do? Well, points are fees for an interest rate. 4.5% interest rate is always 4.5% interest rate but the fee may go higher to buy that rate. That’s basically how it works. So if today’s rate was 4.5% on an FHA loan at what we call par, meaning basically no points and you said Chris, I want 4.25% well, maybe you have to pay 1 point -1% of the loan amount to get the 4.25% and maybe you’d have to pay 2 points to go down to 4% so it always works on a sliding scale now we can actually go opposite, meaning,
If I took instead of 4.5% I said Chris I’m willing to pay 4.75% at 4.75% maybe I get a point credit which means we lower your closing costs by that 1% so there are always numbers to evaluate now I’m a walking calculator so I can help you figure these numbers out a lot of the time it depends should you pay points? How long are you going to be in the property? If you said Chris I’m only going to be here 2 or 3 or 4 years than I’m going to tell you don’t pay points, but if you said Chris I’m going to be here for 15 years well there’s a good chance that paying that money up front but you’re going to save an extra $100 or $200 a month in order to do that. Obviously there’s got to be a benefit long term or I’m going to tell you “don’t do it”
Could Refinancing Help You?
Here’s the deal with refinancing: if you can lower your interest rate, refinancing could decrease your monthly payment, and may save you money in the long run. Interest rates on mortgages are low, historically speaking. That means, if you haven’t refinanced recently, you may be able to take advantage of today’s low rates and potentially enjoy a lower monthly payment. There are also other reasons to refinance, such as freeing up cash from your home’s equity, reducing the length of your loan, or changing the type of mortgage you have. What’s involved? Since refinancing is getting a new mortgage, the process is similar to how you obtained your current loan. You’ll pull together paperwork, apply for a loan, get an appraisal, lock in your rate, sign the loan documents and go through closing. To see whether refinancing could help you, a good start is the “Should I Refinance?” calculator, available on our website at 53.com/financial-calculators. Then, if you’d like to move forward, give us a call, or stop by one of our financial centers to get started and that’s the deal with refinancing.