Save Big on Mortgage Points for Your House

Oh, that feeling of accomplishment when you purchase a house for yourself or your family! It is truly the highest level of appreciation you could give to yourself. Although you may be buying it for someone else or your whole family, it is a gesture big enough to show you that you have done something right in life and are in a good place. You have been saving up for a long time not to have any problems applying for a loan later in life. And see, you have got your perfect house now, and you worked so hard for it! You must have done so much homework before deciding on the most appropriate place. You must have applied for a home loan in several institutions. And then filled up all the forms and submitted all the required documents to get the keys to YOUR house finally!

Do you know what mortgage points are? 

When taking a loan to buy a house or any other house, you have to keep something on a mortgage. You must know what it means to mortgage because you have just taken a loan, but for those who do not know, it means that you are pledging something of monetary value to the institution from where you are borrowing the money. You can commit land, a vehicle, financial instruments, or anything else. The purpose of doing this is to sell this pledged/mortgaged asset if you can’t repay the principal or the loan amount’s interest amount. Mortgage points are your way to pay a lesser interest amount every month if you pay an upfront amount at the time of settlement. Mortgage points are also called discount points and often help you produce a lesser total amount of combined principal and interest.

Is it even worth the trouble?

You might ask,” what is the trouble here?” The problem is that you have to calculate/figure out the break-even point of the amount of the loan. If the number of months comes to more than what you intend to live in the house, you should not purchase points. Instead, you should increase the amount of the down payment. However, say, if the number of months comes to be fewer than how long you intend to stay at the house, you should purchase the discount points to decrease the interest every month.