When shopping for a mortgage, it’s critical to have a general understanding of how points affect your mortgage rate and payments, and ultimately connect to your bottom line. Here are some guides to help you identify your net tangible benefit on a home loan.
When you pay points, you are paying a premium to buy the interest-rate down, thus lowering your monthly mortgage payment. In most mortgage scenarios, you have the choice to pay this point based on the interest rate, and other times you might not due to factors such as the loan-to-value ratio, loan size, loan program, loan purpose, property occupancy, or credit score. (You can see where your credit score stands by viewing your free credit report summary, updated each month, on Credit.com.)