When shopping for mortgages, one of the maddening little details is figuring out whether it’s worth paying ‘points’ up front. Points are percentages of the loan amount that you pay to reduce the rate. They make sense if you expect to hold the mortgage for a significant amount of time, but what exaclty is the appropriate time period? Recently, I found a very useful resource on www.smartmoney.com that offers a way to calculate this time period. The calculator on this site helps you determine how long you need to hold the mortgage to start making a profit on that up-front investment of cash.

It’s important to note that a good lender should also take the time to walk you through a range of scenarios with the mortgage loans you qualify for, and help you make the decision about when a higher rate might be more beneficial in your particular circumstances.

If you have questions about mortgage points or need assistance buying your next home, please give me a call!