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Is buying points bad?

Is buying points bad?

I'm 20 months into a fixed 30 year loan. I am looking to refi my house and get some cash out for a new roof. I do intend on living here long term.

The mortgage guy was saying that the higher rate with no points was better than a lower rate with points. I have reviewed the numbers several times and it seems that even with buying points it would be the better choice for me.

I have ran the numbers for three rates, two with points, one without points. I looked at the monthly payments, total loan amount and remaining loan amount at 15 years. At the mid point all three rates were within $200. The rate with 2 points ended being about $2k more for the total loan amount but had the cheapest payment.

I'm on a fixed modest income so lower payments would be helpful. I do want to be careful about how the numbers can play out at the end of the loan too. I'm thinking that I can refi for a fixed 15 year loan around the halfway point provided the rates are low enough to be of value.

People will gasp for air when I mentioned points but they can't tell me why it's so bad. Can you tell me if doing so if really bad? I do intend on living here for a long time and I am aware of the break even point.


Anonymous's picture
Anonymous
17-05-2015

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