Thinking about buying a home in St. Louis? Congratulations! This is a great time to invest in real estate, and Carlson Mortgage is here to help you secure the best financing for your new home. One important decision you’ll face is whether to buy mortgage points to lower your interest rate. This article will break down the pros and cons to help you decide if points are right for you.

What are Mortgage Points?

Mortgage points are essentially a lump sum of prepaid interest that you pay upfront in exchange for a lower interest rate on your loan. Think of them like a discount you pay for a lower monthly payment over the life of the loan.

Should You Buy Points?

There’s no one-size-fits-all answer. Here are some factors to consider:

• How long do you plan to stay in your home? If you plan to stay for several years, points can save you money on interest over time. However, if you think you might sell or refinance soon, points might not be worthwhile.
• What are current mortgage rate predictions? If rates are expected to fall, you might be better off waiting to refinance later.
• Can you afford the upfront cost of points? Points typically cost 0.5%-3% of your loan amount. Make sure you have enough cash on hand to cover the cost of points in addition to your down payment and closing costs.

Benefits of Buying Points

• Lower interest rate: This translates to lower monthly payments and significant interest savings over the life of the loan.
• Faster equity building: With a lower interest rate, more of your monthly payment goes towards principal, which builds equity in your home faster.
• Tax deduction: Points are generally tax-deductible in the year you pay them.

Disadvantages of Buying Points

• Upfront cost: Points can be expensive, and you’ll need to have the cash on hand to pay for them.
• Break-even time: It may take 2-5 years to recoup the upfront cost of points through your lower monthly payments.
• Lost investment opportunity: The money you spend on points could potentially earn a higher return if invested elsewhere.

Call Carlson Mortgage Today!

As a St. Louis area mortgage broker, Carlson Mortgage can help you shop around for the best rates and points options. We’ll work with you to understand your financial situation and goals and find the mortgage that’s right for you.

Contact us today for a free consultation!

Ready to find your dream home? Contact Carlson Mortgage, your trusted St. Louis mortgage broker, for a free consultation. Call or text us at (314) 329-7314 or fill out our loan application at www.carlsonstl.com/apply.