Rate Buy Downs

Unlock Your Dream Home: A Guide to Mortgage Rate Buy-down.

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As rates inch a bit higher, more homeowners are looking into buying down their interest rate. Curious about what that means and if it’s right for you? Here’s the rundown on mortgage rate buydowns:

– A mortgage buydown is a way to lower your interest rate by paying discount points at closing. Discount points are a one-time, upfront fee and are tax deductible.

– Each point costs 1 percent of the mortgage. For example, one point on a $200,000 mortgage would cost $2,000.

– Each point lowers the rate by roughly 0.25 percent. So, one point would lower a mortgage rate from 6 percent to 5.75 percent for the life of the loan.

If you’ve got some extra savings and can afford it, buying mortgage points may be a smart investment.

When considering a mortgage rate buy-down, it is important to understand the terms of the loan and how the points will affect the overall cost of the loan. It is also important to weigh the cost of the points against the potential savings to determine if it is even worth it. Additionally, it is important to consider the length of the loan and the current market rate.

In conclusion, a mortgage rate buy-down can be a great way to save money in the long run. It can help to reduce the total cost of the loan over the life of the loan and can also help to reduce the amount of interest paid on the loan. Additionally, the points paid upfront are tax deductible.

Have more questions about buying a home or taking out a mortgage?

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