How do you "buy" a better rate?
Do you plan on keeping your loan for a while? Then it may make
sense to "buy" a lower interest rate by paying one or more
"points."
Even if you're unsure of how long you plan to keep your mortgage
before you move or refinance, paying points now for a lower rate
may make sense. For example, do you have a high-paying job now
but you think you might change careers in the next few years? We
can help you sort it out. It's part of our goal to find you the
right loan for your means and future.
A point -- which equals one percent (1%) of the total loan amount
-- is an up-front fee that lowers your annual interest rate and
total interest due over the life of your loan. So, a one point
loan will have a lower interest rate than a no point loan.
Basically, when you pay points you trade off paying money later
in favor of paying money now. You can pay fractions of points,
meaning there are a lot of points packages that can make a loan's
terms more favorable if that's what's right for you.