Seattle Mortgage Refinance Rates
One of the most common and confusing mortgage refinance terms is points. What does this mean? How does it affect refinance interest rates? Do you need to pay points or is it better not to? What are the disadvantages and advantages of paying points in the Seattle market? Points are a fee paid to a lender to get lower interest rates on mortgage loans. They are a one-time and non-recurring percentage of your total loan amount. Traditionally, one point is equal to one percent of your loan. So, if your loan for your Seattle home were for $400,000, one point would amount to $4,000. This amount is then added to your closing costs for your mortgage or refinance loan. Seattle Mortgage Refinance Rates: Advantages and Disadvantages of Points
The obvious disadvantage of paying points is having to spend more money up front. However, the advantage is that many people choose to pay points so that they can avoid spending more money down the line. For every point you pay, your interest rate will generally reduce by one-quarter of a percent. With the rates on the rise, this can be a significant savings. So, if you have an eight percent interest rate and pay one point up front, your interest rate would then be 7.75% for the duration of the loan. In the long run, this can save you tens of thousands of dollars over a 30-year loan. The decision you make is between having lower rates to choose from and more cash in your pocket. At 4MortgageRateQuotes.com, we can help you see the lowest rates available to decide whether or not paying points is necessary for you in Seattle.
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