Should you buy points?

When shopping for a mortgage, I always recommends clients obtain a zero zero quote. This means zero points and zero origination fees. It is really the only way to compare which quote is better.

That is not to say you cannot compare quote that are not quoted this way, but when you are not comparing apples to apples it really makes it hard to decipher which is the lower quote. It can confuse even the best real estate agents as well. Mortgage originators know this, and they still do in an effort to make their offering seems better than it really is.

It stinks, but that is unfortunately just the way is. If they made it easy to tell what was what everyone would simply use the same company. But to the question should you buy points? And the answer is maybe…

Typically, points cost 1% of the mortgage to buy down the rate 1/8 of a percent on the rate. At face value that doesn’t sound all that great, right? It takes a while to make that up. But it is your forever home or you are payment sensitive it might make sense especially if you can get someone else to pay for it such as the seller or have it rolled into your mortgage.¬†Obviously, you are actually still paying for because otherwise you would just ask for more off.

That said, you often can buy points for less. To me 1% isn’t all that great of a deal but maybe you can buy a point for 1/2% or you can purchase 2 points for 1.25%.