08-23-2007, 05:57 AM
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#22
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Board Pinhead
Join Date: Jan 2006
Location: In the basement of my house, Murray, Utah.
Posts: 15,941
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Quote:
Originally Posted by cougjunkie
I must weigh in here and defend my profession for a second. Points are not a ripoff if you plan to keep the mortgage the full term, or a substantial amount of time. For example. Usually paying 1 point or percent will buy down your interest rate .5%. So for example:
200,000 loan amount, at an interest rate of 6.5%, closing costs at 3% so you pay 6000 in closing costs and your payment is 1264.16.
If you pay 1 point and buy down the rate to 6% it looks like this:
200,000 loan amount, interest rate of 6%, closing costs at 3% plus additional 2,000 for 1 point. Your payment is: 1167.15 a month.
So to make it simple you save 100 a month, in 20 months you recoup your original 2k, and over the next 28 years you will save yourself: $33,600.
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Fair enough.
I should have stated that in my situation, points would have been a ripoff.
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