06/30/2025
Did you know that buying mortgage points could save you money in the long run?
When a borrower decides to get a home loan, they’ll pay an annual percentage rate (APR) on the money. Mortgage points are optional fees that borrowers can pay to decrease the APR on their loan. Points can be purchased in increments of .25 (.25, .5, .75, 1, 1.25, etc.), depending on how low a borrower wants to get the interest rate. The amount that buying mortgage points reduces the interest rate also depends on the type of loan the borrower is using.
Keeping in mind that every point costs roughly 1% of the mortgage amount after any down payment has been applied, the actual down payment amount can also vary for each borrower. For example, down payment requirements may be less than 20% on certain types of loans, like FHA or USDA loans.
So, while the more points you purchase will decrease your overall loan amount in the long run, the total due at closing will increase. For that reason, taking your down payment and other closing costs into consideration are all part of the equation.
Want to learn how to calculate the long-term savings vs. upfront costs? Let’s dive into the numbers together!
