How Can I Lower My House Payment?

DID YOU KNOW? The average U.S. mortgage rate for a 30-year fixed loan fell to 2.8% this week, another record low, Freddie Mac said in a report on Thursday. The rate fell one basis points from the week prior and is now six basis points lower than the original all-time low set in mid-September. The average fixed rate for a 15-year mortgage was 2.33%, falling from last week’s 2.35%. (Housingwire)

What are points on a mortgage?

A point on a mortgage will cost 1% of your loan amount and when you apply. You have opportunity to buy these points too.

“Mortgage points — or discount points — allow you to pay more in closing costs in exchange for a lower mortgage rate,” says Lucy Randall, director of sales at mortgage lender Better.com. “That means you’ll have a bigger upfront fee, but a lower monthly payment over the life of your loan.”

Let’s look at this in practice. If you are quoted 3.5% for a rate on your $400,000 loan, but want to reduce it a half point here is how it could work out.

A point is worth 0.25%, so that means you can lower the rate by 0.50 you need to buy 2 points. Each point is $4,000. In order to get your rate to 3% it will cost $8,000. This also means saving a lot of cash in your monthly payment.

For more information on rates, points and the home buying process, let’s talk.

Please consult with a mortgage professional (luckily I have great contacts for you)

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