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Points is the amount charged to the buyer to "buy down" the
interest rate, in other words the buyer pays money up front to get a below
market interest rate. A "par" rate is rate for which there is no charge to get
that particular interest amount. Par rates change daily and sometimes even
several times during the day, depending on what the financial markets are doing.
Sometimes the seller can be asked to pay points on behalf of the buyer.
Depending on how long you are going to own your home,
paying points to buy down the interest rate can be a smart move, saving you
thousands of dollars in interest payments over the years. On the other hand, if
you are only going to own your home a short time it may be smarter to pay a
higher interest rate and let the lender absorb some of your closing costs for
you.
We will be happy to help you analyze your particular situation
and let you know at what point you would "break even" - in other words, make
back your points money, so that you can decide if this would be advantageous to
you!
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