In more detail
On a $300,000 loan, one point costs $3,000. If it cuts the rate from 6.5% to 6.25%, the payment falls by $49.05 a month, so it pays for itself in about 61 months. It is worthwhile only if you keep the loan longer than the break-even.
Glossary
Finance
Mortgage points
Mortgage points are fees paid upfront to lower a loan's interest rate; one point costs 1% of the loan amount.
Last reviewed:
AdSense Placeholder
Slot: header_reference_page
Try these tools
See also
-
Glossary
APR
APR (annual percentage rate) is the yearly cost of borrowing, expressed as a percentage, that includes the interest rate plus certain fees.
-
Glossary
Refinancing
Refinancing is replacing an existing loan with a new one, usually to get a lower rate, a different term or to take out equity.