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Can Homebuyers Save Money by Buying Mortgage Points?

Homebuyers hoping to save money every month on their housing payments may want to consider purchasing mortgage discount points.

“Buying a mortgage discount point is buying down your mortgage rate,” said New American Funding loan officer Ken Smith.

Each point generally lowers your mortgage rate by a quarter of a percentage point and costs about 1% of your loan. Four points would lower your rate by a full percentage point and would cost about 4% of your mortgage.

While buying points before you close on your loan will lower your monthly payments, it only makes sense if you plan to be in your home for a long period.

You also want to make sure you have a financial cushion when you purchase a home.

“Buying discount points may be the right situation for you or it may not be,” said Smith.

Ken Smith NMLS # 1693047