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Mortgage Loan Should You Pay Points? By Louie Latour

If you are in the process of shopping for a mortgage you may wonder about paying points. Many people will tell you to avoid paying points at all costs. Are there any advantages to paying points? Here is all you need to know about paying points on your mortgage loan.

Points, often referred to as discount points, are a fee you pay the lender upfront in exchange for a lower interest rate. One point is equal to one percent of the total loan value. Lenders require people to pay points based on their application status. Mortgage lenders all have different criteria for evaluating your application; however, your loan to value ratio, credit score, and down payment all affect whether or not the lender will require points for your loan.

There are situations where paying points can benefit you. If you have good credit and money in the bank, you can use points to negotiate for better terms on your loan. Most mortgage lenders discount your interest rate in exchange for points. By paying this fee upfront you will pay less in interest over the life of the loan. If you plan on staying in your home you can recoup this expense over the long run.

When you are shopping for mortgages carefully examine how the points you pay reduce the interest rate, and how much it lowers your monthly payment amount. By plugging this information into a mortgage calculator you can see how much you will save in interest over the life of your loan.

Using points to your advantage is a smart way to buy down the interest rate your lender charges you. This will save you interest payments over the life of the loan and has a side benefit of being a tax deductible.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.

St Louis Mortgage Refinance

Louie Latour is a mortgage professional and the owner of RefiAdvisor.com, a mortgage resource site offering a free gift for homeowners: "Mortgage Refinance - What You Need to Know." This guidebook helps homeowners avoid common mortgage mistakes and predatory lending practices.

Claim your free guidebook today at: http://www.refiadvisor.com

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If you have ever gone looking for quotes on a mortgage in order to find out just what a mortgage might cost you, you have probably had the term points thrown at you. So what are points?Each point is a fee and it is based on one percent of the total amount of the loan. There are a couple of ... more...

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