Mortgage Matters with Chris and Bob

We get a lot of questions, many from very seasoned buyers who have purchased several homes.  If you have a question, please email cconlon@afncorp.com and we may use it in an upcoming article.

What are Discount Points?

Discount points are a one-time fee in exchange for a lower interest rate.  One “point” is equal to 1% of the loan amount, so on a $100,000 mortgage, one discount point would be $1,000. Discount points are tax-deductible, and mathematically, if the interest savings over the life of the loan is greater than the points paid, it can be worth it.  Each case is different depending on the time you plan on staying in the home.  We often find people that are rate shopping can find a better rate, but when we look at the cost of the loan with discount points added ends up costing more than a slightly higher rate and can have a higher APR*.  For example, if you chose a 0.25 percent lower rate for an additional 1.5 points because of the lower APR, but you moved in five years, you paid more than you had to. Your break-even on the points was seven years.

Because every situation is different feel free, to call or email us with your specific situation and we can personalized analysis of what would be the best option for you.

Chris Conlon cconlon@afncorp.com 704-609-5017

Bob Parm bparm@afncorp.com 704-778-2603