How do you “buy” a better rate?

Do you plan on keeping your loan for a while? Then it may make sense to “buy” a lower interest rate by paying one or more “points.”

Even if you’re unsure of how long you plan to keep your mortgage before you move or refinance, paying points now for a lower rate may make sense. For example, do you have a high-paying job now but you think you might change careers in the next few years? We can help you sort it out. It’s part of our finding the right loan for your means and goals.

A point — which equals one percent (1%) of the total loan amount — is an up-front fee that lowers your monthly interest rate and total interest due over the life of the loan. So, a one point loan will have a lower interest rate than a no point loan. Basically, when you pay points you trade off paying money later in favor of paying money now. You can pay fractions of points, meaning there are a lot of points packages that can make a loan’s terms more favorable if that’s what’s right for you.

There are a variety of rate and point combinations available. When you look at different loan programs, don’t look just at the rate — compare the whole package. Federal law requires lenders to publish their loans’ Annual Percentage Rate, or A.P.R.. The A.P.R. is a tool used to compare different terms, offered rates, and points.

About luxpropertygroup

Lux Home Group consists of FULL TIME real estate professionals in the Phoenix area. Real Estate is not only our job, it is our passion. So, if you are interested in buying, selling, or renting a home in the greater Phoenix Metropolitan Area, or you would like to get involved in the fabulous world of real estate sales or investing, give us a call at 480.442.1442 or email us at info@listingsbylux.com. If you just want to hang out with some super fabulous people...you can call us for that, too.

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