Fairfax County VA Homes for Sale - Is Buying Points to Lower Your Interest Rate a Good Idea?
Home buyers often have the option of buying points to decrease the interest rate of their mortgage. Although the appeal of having a lower interest rate sounds like a smart move, you need to make sure that you weigh all the factors before you decide to spring for the discount points.
Generally, the cost of a point is equal to 1% of your loan. For example, buying a point for a $200,000 loan would cost $2,000.
The purchase of a point typically buys down the interest rate by 0.125%. In other words, if your interest rate is 6.5%, this rate would be lowered to 6.375% after the purchase of one point.
The most important factor to consider is how long you plan on staying in the house. If you plan on living in the house for five years, buying points probably does not make sense.
If you plan on staying in the house for the life of the loan, buying a point for a lower interest rate may save you money in the long run.
In order to calculate the potential savings of buying points, find a good online mortgage calculator and do the math for both the actual interest rate and the rate after buying points. Don’t forget to factor in the money that you spend on the points. You might be surprised at the difference, often it may not be enough to warrant the expense of buying the points.
One other factor to consider is that if you do buy down your interest rate, the money that you spend is tax deductible in the year that you purchase the property.
It’s important whnowen deciding whether or not to buy points to check the math from every angle. This may be a great way to save some money – or you may find that it’s not worth the trouble or money after all.
Ready to purchase one of the Fairfax County VA homes for sale? If so, please request my FREE Seller Book or CD at no obligation to you, now! You can learn the selling process from beginning to a successful end.
Just contact me now! Or call me direct at 703-909-3939 or drop me an email at Steve@HomeSearchWebsite.com for more information about selling your home at the best price.
Steve Hawkins
Long and Foster REALTORS®
Springfield, Virginia
www.HomeSearchWebsite.com
Steve@HomeSearchWebsite.com
703-909-3939
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