Ten Point

Nov 07

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Ten Point

Plug in Points to See How Your Financing Will Pay Off

One of the most innovative financial markets is the home mortgage loan sector. And, when you toss points into the mix it adds convolution to an already complicated process. Most buyers don’t understand the concept of points and hesitate to ask or go to the trouble to learn about the process. They become overwhelmed and can be at the mercy of whatever the lender offers.

It’s actually quite simple. Mortgage points are fees paid to a lender for a loan. The points are usually linked to interest rates with the more points you pay for, the lower the interest rate. You Can view them as pre-paid fees. It’s sort of pay now with points or pay later with interest.

If you have the cash on hand to pay points and you still can’t decide if you should pay them to get a lower interest rate ask yourself what you would do with the money if not spent on points. If you’re buying a home you probably have many needs for the extra money but don’t be short-sighted. Invest for the long term.

Most lenders typically charge one point for the loan origination fee and additional points on loans that have interest rates under the current market rate. The lender gets some money up front in exchange for a lower interest rate. It’s a win situation for both parties. You can check the newspaper or the Internet for current rates and points being offered and their combinations, which are many and negotiable.

Some mortgage points will reduce the interest rate and some won’t. Discount points are based on how much money you borrow. One point equals 1% of the loan. For example, 1% of $100,000 would be $1,000. You can expect a reduction of about one quarter percent for each point paid. Paying points does not reduce the amount borrowed but how much you’ll be paying back. So, paying points depends on a lot of factors.

If you don’t have the cash to pay points then it’s a moot point. (No pun intended). The main thing to consider is how long you plan to keep your home. In other words, will you keep the home past the break-even point? That’s when your accumulated monthly savings exceed what you’ve paid in points to get the interest rate down.

Paying points is probably a good investment if you plan to keep the home five years or more. Points can be considered an investment when it continuously yields a savings the longer you stay in the home.

A chart can be prepared to show you the options and when the break-even point occurs. Ask the lender to quote points in dollar amounts so you can easily see how much you’re spending.

It’s thought the mortgage point system is used only in the United States. That’s probably a plus for the creators of our financial system which enables more families to purchase a home who otherwise would not qualify. Get the point?

About the Author

This article was written by Arek Zbikowski. For more tips and information on saving money with mortgage points feel free to visit my site at www.atozmortgageguide.com.

when was the last time you wore diapers funnest story wins ten point?

mine is when i was ten i was sleeping over at a friends an i wet the bed his dad then made me wear girls pull ups for the rest of the time i was over there

well I was a CNA in training and we had clinicals at a nursing home and we were getting trained on putting depends on seniors, but we were using each other. So we had to lay in a bed and act immobile while someone rolled us around putting on depends and getting us dressed (we wore shorts and a tank top and they had to put on depends, pants and a tshirt) well when it was my turn they got my depends on and my pants on and the fire alarm went off. So in my diaper I had to help get resedents out the building, well I was helping one edderly lady down the stairs and she tripped and i fell trying to support her. I was put in the ambulance to get taken to the hospital becuase i had a huge knot on my head, and a cut on my leg. well they took off my pants and yep....i wa sstill wearing the diaper. one of the nurses asked if i was even a resident! lol

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