Already on ArticleSlash?

Forgot your password? Sign Up

Mortgage Refinancing Discount Points: Should You Pay Points For a Lower Mortgage Rate?

Louie Latour

Visitors: 140

Points and origination fees are important charges to consider when mortgage refinancing. Paying one discount point upfront usually lowers your mortgage rate by ¼ percent. Is the trade-off worth forking over the cash for discount points at closing? Here are a several tips to help you understand mortgage points and decide if paying is worthwhile when mortgage refinancing.

One point, called in this case a “discount point” is one percent of your loan amount in the form of “pre-paid interest. ” Whether or not paying this fee is worthwhile depends how long you plan on keeping the mortgage. If you sell your home or refinance the loan before recouping your expenses, you’ve wasted your money by paying discount points.

Suppose you were refinancing a $225,000 mortgage with a 5.25%, fixed interest rate mortgage loan for 30 years, but have to pay one point to qualify. Your monthly payment after paying the $2,250 fee would be $35 lower because you paid this fee. With the $35 per month savings it will take you nearly 65 months, just over 5 years to recoup the expense.

The average homeowner in the United States refinances their mortgage every 5-7 years; how much more could you save by refinancing five years from now with higher income and better credit? For many homeowners paying discount points simply isn’t worthwhile when running the numbers. If you're rate shopping for a new mortgage, ask your loan representative for rate combinations with and without discount points. If you're not seeing a 1/4 point change in the mortgage interest rate or your loan representative will not budge on removing points from your quotes, find another mortgage lender.

You can learn more about your mortgage refinancing options, including costly mistakes to avoid with a free, six-part video tutorial.

To get your FREE six-part Mortgage Refinancing Tutorial, visit using the link below.

Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free video tutorial: “Mortgage Refinancing - What You Need to Know, " which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit .

Claim your free mortgage refinancing tutorial today at:

Home Mortgage Discount Points


Article Source:

Rate this Article: 
Refinance an Adjustable Rate Mortgage - Should You Pay Points When You ..
Rated 4 / 5
based on 5 votes

Related Articles:

Mortgage Refinancing Information – Paying Points May Not Lower Your Mortgage ..

by: Louie Latour (January 20, 2007) 
(Real Estate)

Mortgage Refinancing – Should You Pay Discount Points

by: Louie Latour (March 07, 2007) 
(Real Estate)

Should You Purchase Points When Refinancing Your Mortgage?

by: Charley Hwang (May 26, 2007) 
(Real Estate)

What are Discount Points on a Mortgage?

by: Ned James (March 09, 2011) 
(Real Estate/Home Buying)

Mortgage Refinancing and Lower Interest Rate Myth

by: Vishy Dadsetan (January 28, 2007) 

Mortgage Refinancing – Rate Caps Protect You When Refinancing With an ..

by: Louie Latour (January 23, 2007) 
(Real Estate)

Mortgage Refinancing: Mistakes in Your Credit Reports Will Damage Your Mortgage .

by: Louie Latour (January 24, 2007) 
(Real Estate)

How Refinancing Or Applying For a Mortgage Could SkyRocket Your Mortgage ..

by: Neil Venketramen (August 17, 2008) 
(Finance/Mortgage Refinance)

Mortgage Refinancing With an Adjustable Rate Mortgage

by: Louie Latour (April 02, 2007) 
(Real Estate)

Refinance an Adjustable Rate Mortgage - Should You Pay Points When You ..

by: Darin Sewell (July 29, 2008) 
(Finance/Mortgage Refinance)