Many people don’t know anything about home loan points, even those that may own a home. They just are not sure of what home loan points are. Having less home loan points can help you with many different things so that you will end up paying less on your mortgage.
Okay, we will discuss what home loan points are, as well as the many advantages they offer specifically to someone wanting to buy a home.
Home Loan Points 101
It is actually quite easy to understand home loan points. In a nutshell, these points help you get a lower interest rate when it comes time for you to purchase a new home.
Home loan points are basically 1% of your loan – so, if you’re taking out a loan of 100,000, one point would be about $1,000. Many times, you can buy these home loan points, and lower your interest rate.
But you may not know if home loan points are really worth it. Do they make a bigger difference and why are they even there?
Good questions, actually, and questions you can’t find answers to easily.
Are home loan points really worth the time?
This is what a lot of home owners struggle with because they are not sure if they can afford the extra money and if it will really help in the long run.
It can depend on your situation and the type of loan and the loan company your looking at. The big question is do you have the extra money to spend on the points and how much are you going to save?
If you are going to be saving as least $40 a month then you should take home loan points into consideration. The savings will outweigh the disadvantages and the payments that you may have upfront.
Why are these home loan points there anyway?
Not only are home loan points here to help you pay for a better long term loan, but they’re there to let you have the choice. You can pay more now, and get a lower interest rate, but if you don’t have the money, that’s okay, too – you still get a decent loan.
You benefit, and the loan company benefits, because they get more money up front, something that’s important to them. Most of the time, though, loan companies leave home loan points as optional.
Bottom Line…
In most cases, home loan points can be highly beneficial but they are not required. Choosing to buy these points will depend on a number of factors to include your situation and personal preference, as well as how much extra money you have with which to work.
Home loan points can help you do so many things and in the end, pay less each month on your mortgage payment. Don’t be surprised! Learn about home loan points – and how can they benefit you, the potential home owner? Low Income Home Loan
For All of your INCORPORATING needs contact Samuel Wierdlow Inc. (www.SamuelWierdlowInc.info)
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