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Paying Points to Lower Rate



Whether you're financing a new home purchase or refinancing an exiting mortgage, a lender usually offers a range of interest rates at different amounts of points. A point equals one percent of the loan amount.


For example, 3 points on a $100,000 mortgage loan would add $3,000 to the costs of the loan.

$100,000 + (100,000 x 0.03) = $103,000


As a rule of thumb, each point reduces the interest rate a mortgage company is offering by about one eighth to one quarter of one percent. Generally, the lower the interest rate on the loan program, the more points the lending institution has incorporated into the loan.

Analyzing various interest rates and associated points will save you money. If you plan to stay in your home for a long period of time, then it may be worthwhile to pay additional points to get a lower interest rate. A Wyndham Capital Mortgage Banker can help you decide what combination of rate and points is best for you.


Contact us today to learn more about paying points to lower your rate:


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The figures shown are estimates and provided for information purposes only.
The actual figures may vary based on loan product, credit profile, property value, geographic location, occupancy and other factors.

Now that you have the numbers, let's take the next step.

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