Home A Loan Mortgage, LLC
(404) 889-8411

How Mortgage Points Can Lower Rates and Make Payments More Affordable

Learn how mortgage points can help make your monthly mortgage payment more affordable over the life of the loan.
May 31, 2023

As you explore the world of home buying and financing, you may have come across the term "mortgage points." If you're wondering what they are and how they work to lower your mortgage payment, this article is for you. So let's dive into the details.

How Do Mortgage Points Work?

Mortgage points are upfront payments made at closing in exchange for a reduced interest rate. Each point generally costs 1% of the total loan amount and can lower your interest rate by about a quarter of a percent.

The best part? This reduction is not temporary; it stays in effect for the entire duration of your loan!

To give you a clearer picture, let's imagine you're getting a 30-year fixed-rate home loan for $100,000. Each mortgage point would cost you $1,000. If your initial interest rate is 6.5%, purchasing two points for $2,000 would lower your interest rate to 6%. And here's the icing on the cake: this reduced rate stays with you throughout the life of your loan.

Now, you might be wondering, "Why should I care about lowering my interest rate?" Well, it's simple: a lower interest rate translates into lower monthly payments and savings over time --making a significant difference in your financial well-being.

But hold on, mortgage points may not be for everyone. It's important to consider your personal circumstances before deciding if they're the right choice for you. Here are a few factors to ponder:

1. Affordability: Purchasing mortgage points requires an upfront payment of at least 1% of your total loan amount. If you have the financial means and haven't allocated that money for other purposes like your down payment, it's worth considering.

2. Rising interest rates: If you're concerned about the unpredictability of interest rates and want to secure a lower rate, mortgage points can help. They give you peace of mind and shield you from potential increases.

3. Long-term commitment: Mortgage points are most beneficial if you plan to stay in your home for five or more years. If you're thinking of selling or refinancing in the near future, the benefits may not outweigh the costs. Use points for when you're ready to settle down.

4. Fixed-rate mortgages: Mortgage points are generally suitable for fixed-rate mortgages, as the interest rate remains constant over time. For adjustable-rate mortgages, the rate can fluctuate, making it less advantageous to purchase points.

Unsure whether buying mortgage points is the right decision?

This quick calculation might help. Calculate how much you would save each month with a lower interest rate. Then, divide the cost of one point by that monthly savings. The result will tell you how many months it would take to recoup your investment. If it aligns with your long-term plans, it could be a good deal for you.

Contact us to assess your unique situation and guide you in finding the right home loan option for your needs.

Mortgage points offer a fantastic opportunity to take control of your mortgage by lowering your interest rates. They can make your monthly payments more manageable and save you money in the long run.

To make the most of this tool, let us carefully assess your financial situation and help you accurately crunch the numbers to secure a brighter and more affordable future in your new home.

PRIVACY POLICY

Customer service is very important to us. As we continue to improve and expand our services, we recognize our customers' need and desire to preserve their privacy and confidentiality. Safeguarding our customers' privacy is also very important to us. We have adopted standards that help maintain and preserve the confidentiality of customers' nonpublic personal information. The following Statement affirms our continued efforts to safeguard customer information.

Information We Collect

We gather nonpublic personal information about our customers as may be necessary to conduct business with our customers. We collect nonpublic personal information about you from the following sources:

  1. Information we receive from you on applications or other forms, over the telephone or in face-to-face meetings, and via the Internet. Examples of information we receive from you include your name, address, telephone number, social security number, credit history and other financial information.
  2. Information about your transactions with us or others. Examples of information relating to your transactions include payment histories, account balances and account activity.
  3. Information we receive from a consumer reporting agency. Examples of information from consumer reporting agencies include your credit score, credit reports and other information relating to your creditworthiness.
  4. From employers and others to verify information you have given to us. Examples of information provided by employers and others include verifications of employment, income or deposits.

Information We Disclose

Your personal information will only be retained for the purpose of providing you with our response to your query and will not be made available to any third party except as necessary to be disclosed to any related entity for the purpose intended or as required to be disclosed under law.

By submitting data on our website, the visitor is providing explicit consent to transmission of data collected on the website.

We treat data as confidential within our firm and require a strict adherence of all our employees to data protection and our confidentiality policies.

All visitors, however, should be aware that our website may contain links to other sites that are not governed by this or any other privacy statement.

We reserve the right to amend (that is, add to, delete or change) the terms of this Privacy Statement from time to time.