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Should one pay points to get a lower rate when refinancing?

Asked by Trulia Brooklyn, Brooklyn, NY Wed Jan 30, 2013

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Javier Meneses’ answer
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It depends. There are so many things to consider when deciding if one should buy down an interest rate or not. Sometimes buyers with limited funds, prefer to hold on to the money rather than spending it on buy down points. I've seen buyers who don't even have the option to buy down rates because the very little cash they do have available needs to stay put for required reserves. For those who can, I suggest to sit with your Loan Officer and go over all the numbers involved. What will it cost you to buy down the rate? what will the new monthly payment be? how long will it take to re-gain the points you've paid in monthly savings? what's the overall savings in the life of the loan? etc.

It is important to look at all these things in order to determine of it's worth it or not...

Javier Meneses
NMLS #23130
Senior Loan Officer
Sterling National Bank
jmeneses@snb.com
2 votes Thank Flag Link Wed Jan 30, 2013
If you plan on staying in the house for a long time (15 years or more) it is probably worth while to buy down the rate. If there is a chance you may be selling in the near future (3-7 years) you are probably better off not buying down the rate. This is because buying down the rate will save you money in the long term but not in the short term. This is also and simply a matter of personal preference and limited to your budget/financial standing.

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
0 votes Thank Flag Link Thu Jan 31, 2013
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