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Old 02-23-2011, 09:16 PM
 
123 posts, read 523,556 times
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Taking out a $415,000 loan with 15 years fixed mortgage. The bank is offering 4.25% with no points. I'm planning to pay it off in 12-14 years. Is it worth buying addition 1 or 2 points?
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Old 02-23-2011, 11:28 PM
 
Location: Laguna Niguel, CA
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How much lower is the rate if you pay 1 or 2 points?
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Old 02-24-2011, 05:18 AM
 
Location: Plano, Texas
1,676 posts, read 6,455,969 times
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In today's market, buy downs are not worth it. If you pay a point, your rate would only drop by .125. The difference in payment is only $25 giving you a breakeven point in 160 months. Would be better to pay the $4150 toward principle.
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Old 02-24-2011, 06:06 AM
 
Location: Wake Forest, NC
835 posts, read 3,613,855 times
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Quote:
Originally Posted by VictorBurek View Post
In today's market, buy downs are not worth it. If you pay a point, your rate would only drop by .125. The difference in payment is only $25 giving you a breakeven point in 160 months. Would be better to pay the $4150 toward principle.

I absolutely agree- this is not an opinion but a calculation. In todays market the calculation favors the bank and not the borrower so don't do it.
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