{ "media_type": "text", "post_content": "How do people feel about points on a mortgage? NPV checks out on my end but must be good for the bank also. 1.4% points for 2.875% rate.", "post_id": "5f519357066eba001a040a76", "reply_count": 14, "vote_count": 1, "bowl_id": "5a5242b78e26290018502ca0", "bowl_name": "The Real Estate Bowl" }

How do people feel about points on a mortgage? NPV checks out on my end but must be good for the bank also. 1.4% points for 2.875% rate.

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How long do you plan on owning the property? Do the break even calculation and there is your answer.

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If you plan to hold forever it usually makes sense to pay points. Obviously depending on the cost in points, your break even is typically 3-7 yrs. I’ve never paid points because I haven’t held longer than 5 years for non- investment property.

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That sounds really high. I’m getting 2.875% with no points, no appraisal, no financing fees, on a 30 year refi, 15% down. Shop around more - I applied to 5 different lending companies before I found the best rate

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20% is what I have. Just purchased our house 5 months go.

I like points on investment property cause you’re trying keeping the note for the full 15 years (growth) and taking on more debt anyways On personal property not so much, since I’m paying it down as quickly as possible

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Don't pay more than 1 point

As someone else mentioned, there is a break even on buying points to have a lower interest rate vs not buying points and taking the higher interest rate. Generally speaking, if you plan to keep the house for many years, it's better to go with the lower interest rate (points). If you'll be selling in a few years, you won't be in the house long enough to reap the benefits of the lower interest rates and the points will just be a sink cost.

The equation: Costs for points/(monthly payment no points – monthly payment with points) = X months. Old math used to be a breakeven of 36 months of less was good, but that’s a rule of thumb. If you know you’re going to hold for a long time and not refi, it generally makes more sense.

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