What are Mortgage Points and How can you buy them?
When you take out a mortgage, the lender will assign an interest rate based on the loan term.
If you want a lower interest rate to reduce your monthly payments, you can buy points.
You can buy points when you initially take out a mortgage.
Each point is typically worth .25% of the interest rate.
You can buy points in one of two ways: In cash upfront or by adding the cost to the total mortgage.
Than if you paid for points up front and you end up increasing the loan-to-value ratio too much, you may wind up getting a higher interest rate.