Is paying for a mortgage rate buydown a good idea for you?

Whether buying property or refinancing, you have the option to pay for points and lower the mortgage interest rate.

What are the pluses and minuses of investing in points? And what analysis must you make to decide if buydown points are in your best interest? I’ve got some answers for you today.

What exactly are points?

Points, sometimes called discount points, are nothing more than interest paid in advance to achieve a lower interest rate.

Think of a teeter-totter. The more you push down on the interest rate, the higher the points (cost) to accomplish that lower interest rate.

Points are calculated based on the loan amount, not the sales price or property value. For example, the purchase price is $1 million, and the loan amount is $800,000. One point of the $800,000 loan amount is $8,