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.