Question by SH: Should I avoid buying points when buying a house for the first time?
I am planning on getting a 30-year fixed rate loan. I am planning to stay at the house for at least 15 years and planning on paying off the mortgage as soon as possible ( in about 10 years or less). The loan amount is $ 550K. Any suggestions please.
Best answer:
Answer by kemperk
yes but also ask around; you might get 2.4% interest rate offers
What do you think? Answer below!
Yes!!! Buying points is more designed for people who would have more trouble paying the regular mortgage payment on a monthly basis in the beginning of their mortgage term. It is basically paying interest upfront which is the opposite of your goal. If you have the extra money to use at closing you are better off putting it towards the down payment to reach your goal faster.
Run it both ways on the mortgage calculators
Basically you pay now and pay less later; generally a good idea if you can come up with cash
You’re reducing your interest rate and saving money in the long run
And you’re planning on being in this house in the long run, so probably good idea
You put your money down, you apply, you try to get approved
Need 3.5-5% down FHA, and 10-20% down for conventional
The MORE you put down, the better your chances of loan approval, and the LESS you pay in interest (tens of thousands of dollars) over the life of the loan
Putting down 20% avoids substantial extra costs of PMI