What are points and should I pay them?

Discount points are fees paid to the lender at closing in exchange for a lower interest rate. This is also called “buying down the rate”. One-point costs you 1% of your mortgage loan amount (or $1,000 for every $100,000). There are two primary factors to consider when deciding whether to pay for points. The first is the length of time that you expect to live in the house. In general, the longer you plan to stay, the bigger your savings if you pay discount points. The second is, can you afford them after making your down payment and calculating your closing costs.

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