This is getting to be my opening line but it depends on your situation. Not to repeat what has been said but I agree with Gina that it depends how long you plan on staying in the house but also the terms of the loan.

Right now our office is getting someone into a home with a buy down loan which makes a lot of sense for them and is getting them a home they fell in love with. The loan is fixed but adjust 3 times during its term for the 1st 3 years to predetermined rates.

Every type of loan has its purpose, you just need to find the one which is right for you and your circumstances.

Speaking with an honest trustworthy mortgage rep is important though, that can be tough sometimes greed can get in the way. Find someone with integrity from referrals of people that have used the mortgage rep in the past.

Good Luck...

http://www.realrep.com

All responses so far are accurate--it really depends on how long you plan on staying in your home. For most buyers that plan on staying for at least 5 years or so, it is usually better to buy down your rate, but work the calculations to see what makes the most sense for you.

Both Sean & Kelly are correct, as a Buyer the ablity to buy down your interest rate will increasingly be the only way to get a lower interest rate in a credit enviroment where banks are going to be looking at the buyers credit score to deterime the rate, going back to risk. The higher the risk the higher the rate. As a Seller, offering to pay points will give you an edge in marketing as it will help a qualified buyer, buy at a lower rate as opposed a lower to price, when the home is price right.

Hello Valerie,

Kelly is absolutely correct. That is the formula that a good mortgage broker uses and should explain to you when they are going over your financing options with you. If you need further assistance you can post another question here or you can contact me directly at the number or email provided below.

Sean Anderson
973-292-6500 ext129
sanderson@mtgexpress.biz

Whether or not it will be beneficial to buy down your rate will depend on how long you think you will be in the home. To determine if it will be worth it, calculate your monthly payment without the points discount and then calculate it again at the new rate with the points discount. Take the monthly savings and divide it into the amount it will cost you at the table for the discount. This will tell you how long it will take you to break even on the upfront cost. Beyond that threshold point it is a savings every month. If it takes you 2 years to reach that threshold and you only plan on staying for 2 years, then it might not be worth it. If you plan on staying 7 years, then it might be worth it to you. I hope this helps. Let me know if you would like a recomendation to a great agent in Burlington County, NJ. I have a contact there who has done a magnificent job for my past clients and friends.