Allen Park

At one time there was a mortgage interest rate and that was it. 4,5 6…whatever. Home buyers did not have a choice. Add discount points to this and the answer was always the same…take it or leave it. Today, buyer’s have more choices in how they finance their new home. Often the question is should I pay point’s and buy my interest rate down or should I close at a rate with no points. The answer lies in how long are you going to stay in the house and also do you have the money to buy the rate down.

Let’s say that you are borrowing $100,000 at a rate of 5.5% and the principal and interest amounts to $567.79. If you were to pay 1 discount point ($1,000) and lower the rate to 5.25% the principal and interest payment would be $552.20. A savings of $15.59. The pay back period for this $1,000 investment is 5 years 4.14 months. So if you were planing on staying in the house more than 5 years and 4 months this would appear to be the better thing to do. More on discount points later. If you have any questions on home financing please feel free to respond.

Tags: Allen Park Homes, Downriver Homes., Lincoln Park Homes, Riverview Homes, Southgate Homes, Trenton Homes, Woodhaven Homes, Wyandotte Homes

Posted on Saturday, August 22nd, 2009 at 10:41 am and is filed under Homes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.