More than ever, mortgage borrowers are looking for ways to manage the amount of interest they pay. The Federal Reserve has raised the short-term Fed Funds rate resulting in average. In the search for interest relief, borrowers are increasingly looking at their options, and one common choice is to pay more in mortgage discount points.
Mortgage discount points are a one-time cost paid to the lender in exchange for a lower interest rate on a home loan. Because the homebuyer is required to pay more money up front, points raise the closing expenses. In turn, they lower the monthly mortgage payment and the total amount of interest paid throughout the loan’s term. When a lender states you can “buy down” the rate, they are referring to mortgageThe cost of mortgage points is typically 1% of the loan amount.