NYS Associate Broker
Keller Williams Landmark II
If you are going to live in the home long enough to get double the return it may be a good deal to buy down points. With rates as low as they are today I doubt it is a viable option.
Following my advice, if the points cost $2,000 you should look for $6,000 in monthly payment reduction over the holding period. Yeah, yeah, taxes, I know, any right off you write a check for is not tax shelter, it is an expense.
Hope this is helpful,
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
Unwavering Commitment to Service, Unsurpassed Results
2nd best investment you'll ever make. Or wait to buy Facebook later 1Q next year. or even Qualcomm (qcom)
you're already buying the best... Property.
Property only goes up from here. Buy goog and you'll pay off your house and retire in 10 years.
First your lender may require you to have funds on hand as a reserve. Next, buying down the rate depends on the time you'll own the home and the pay back. If you can pay $X more now and recoup it in 1-2 years after which you are ahead, and you plan to be there 3 or more years, go for it. If the pay back is 5 or more years, it gets pretty iffy. Most people change homes or loans in less than 7 years.
Your lender can go over the various costs/benefits with you and help you decide if you don't need to keep the additional funds in reserve.
Assuming you have sufficient funds to cover both a 20% down payment and the closing costs, the lender most likely will expect you to have sufficient reserves to cover about 2 months of mortgage payments (Principal, Interest, Taxes, and Insurance or PITI) after settlement.
If you have additional funds available, then you can consider making a larger down payment and/or making a contribution towards 1 or 2 points to lower the interest rate on your mortgage. The larger the down payment and/or the lower the interest rate on your mortgage, the lower your total monthly mortgage payment will be - and the easier it will be for you to qualify for a mortgage.
You should discuss these options with your mortgage lender or broker.
Your extra cash is extra cash. Why spend it...? SAVE SAVE SAVE is the "new" American way...!
Pay your debt down. that is what I always preach. If you can decrease your debt then do it. Always have cash reserves though.
609-868-1171 call / text / email 7 days
Thank you for your question.
Yes, if you are lucky enough to have more than 20% down to put down for your mortgage you can pay more down if you want. Your mortgage will be decreasing depeding according the amount you put down. Buy points to reduce your interest rate if you are planning to stay in the home for several years. Have the loan officer run you both scenarios to see what makes sense for you.
Let me know if you have any other questions.