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To Pay Points Or Not To Pay Points - That Is The Question!
How do you "buy" a better rate?  Great question - let me tell you.
A point -- which equals 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 also, meaning you can paying 1.5% to get a lower rate than if you paid 1%.
Several major lenders are offering "No Closing Cost" and "No Fee" loans.  This is a great concept for someone who is not planning to stay in their home for very long.  Otherwise, it could be a big rip-off!  No one, I repeat, NO ONE, does a loan for free.  You either pay the fees upfront, or you pay them in the rate.  A mortgage planner will look at your long-term goals and help you determine which is the best way for you.
Do you plan on keeping your loan for a while? Then it may make sense to "buy" a lower interest rate ... more

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