Buying Down Mortgage Rates with Points
A point, also known as a discount point, are fees paid to the lender or broker for the loan. The more mortgage points you pay, the lower the rate will be. A point is equal to 1 percent of your mortgage amount. Example, if your mortgage loan is $400,000, and you buy 1 point, the additional upfront costs would be $4,000 which can be rolled into the mortgage instead of having to come up with the payment at closing. Lender
APR / Rate
Fees / Points
Payment
 NMLS #401822
5.478%
15-Year Fixed
5.250%
$6,000
Includes 0.500 points for $2,000
Lender Fees: $4,000
$3,216 /mo
 NMLS #6606
5.652%
15-Year Fixed
5.500%
$3,952
Includes 0.988 points for $3,952
Lender Fees: $0
$3,269 /mo
NMLS #401822
6.506%
30-Year Fixed
6.375%
$5,495
Includes 0.875 points for $3,500
Lender Fees: $1,995
$2,496 /mo
NMLS #6606
6.577%
30-Year Fixed
6.490%
$3,612
Includes 0.903 points for $3,612
Lender Fees: $0
$2,526 /mo
 NMLS #3030
6.658%
15-Year Fixed
6.500%
$4,000
Includes 1.000 points for $4,000
Lender Fees: $0
$3,485 /mo
NMLS #3030
7.338%
30-Year Fixed
7.250%
$3,500
Includes 0.875 points for $3,500
Lender Fees: $0
$2,729 /mo
Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes and insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and product details.
Rolling points into your mortgage loan will increase your loan amount and total costs, but you will probably still save money in the long run because your mortgage rate will be lower. Usually, 1 point can get an eight to a quarter point percentage drop in the mortgage rate. You can use a mortgage calculator to estimate what the monthly mortgage payment will be with the lower rate and also figure out how long it will take to recoup the cost of points. The longer you are planning to stay in your home the more sense it makes to buy down the mortgage rate you will pay. You can also ask for points to be quoted to you as a dollar amount, rather than just as the number of points, so that you will actually know how much you will have to pay for getting a lower mortgage rate. Explore Other Mortgage and Refinance Offers
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Getting a lower mortgage rate is possible by shopping around for the best mortgage rates. Another option to getting a lower rate is to buy points.
