Your name saw this post on The ActiveRain Real Estate Network and thought it might be of interest to you. Please see the link below to review the post.
What Do Points Have to Do With Woodbridge (Middlesex County, NJ) Real Estate?
You may have heard of points when looking for Woodbridge real estate. Maybe your loan officer told you that you can trade points for a better interest rate. That sounds good, but just what are points? Let me give you a better idea of just what points are and how they work.
What Are Points?Points, more specifically discount points, are a percentage of the total loan amount for the house that is pre-paid to the lender. Each point is worth one percent. Your lender may offer a lower interest rate for your mortgage loan if you buy discount points.
What do Discount Points Cost?The cost of each point is equal to one percent of the loan amount. For instance, for a $200,000 loan one discount point equals $2,000.
For example, you are trying to buy Woodbridge real estate worth $200,000. The lender may tell you that if you buy 2 points at $2,000 each, you'll get an interest rate two percent better.
Should I Buy Discount Points?Some lenders will allow you to purchase discount points to be approved for the loan. By buying a discount point, you'll get a lower interest rate. This can reduce your monthly payments, which could put ... more
Are you on The Rain? Grow Your Network!