Alabama Home Mortgages
When you start shopping for rates on your home mortgage in Alabama, you will probably hear the term "paying points" ban tied about. One point refers to an amount equal to one percent of your mortgage amount. For a $100,000 mortgage, one point would be equal to $1,000. Alabama mortgage brokers use point as a way to get consumers a better rate on their loan. For example, you may be able to get a 5% mortgage with no points but if you are willing to buy down the rate by paying 1 point the broker may be able to lower your offer to 4.5%.
The question always comes up “But is it worth paying the points to get the discount on the mortgage terms?” While you should not automatically assume you are saving money by buying down your rate, paying points can be beneficial for some. All mortgages are different and everyone have a different time horizon or purpose for owning the home. Before you decide to pay the point or not on your Alabama home mortgage, analyze the current situation you are in to see what is right for you.
Should You Pay Points on Alabama Home Mortgages?
There are three factors that come into play when looking at the advantages and disadvantages of paying point on your mortgage:
- How many points are you going to need to pay down?
- What change will there be in the interest rate for paying the points on the mortgage?
- How long do you plan on staying in the house you are looking to buy or refinance on?
To figure out if it is worth the cost to buy down the rate first figure out how much you will save each month on your mortgage payment because of the lower rate. Then multiply that number by the number of months you expect to live in the home the mortgage will cover. If the amount of savings is greater that the total cost of the points paid it could be to your favor to pay the point on your Alabama mortgage.
When it comes to your Alabama home loan, paying points can be a very effective strategy to save on the total cost of your mortgage. Should you be looking for the best rates currently available at the lowest possible price then let us match you with local lenders ready to earn your business. By comparing mortgage rate quotes from multiple lenders you can help yourself save time and money while you secure the lowest mortgage rate possible. Rates will not stay low forever so take the time to find the best rates on Alabama home mortgages now.
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