Local Housing Market

Lender Outlook - May 2022

Lender Outlook - May 2022

Over the last six months, interest rates have risen sharply. We’re often asked if paying points to lower the interest rate is a good idea.

What are points?

Mortgage Points are fees that the borrower can pay in order to lower the interest rate. One point is 1% of the loan amount and generally reduces the interest rate by .25%. With a loan amount of $300,000, 1% would cost $3,000 and if the interest rate was 5%, it would be reduced to 4.75% by paying points.

For a $300,000 loan amount at a 30-year fixed rate mortgage, below is a breakdown of how much interest the borrower would pay over the 30-year life of the loan. And, the difference in monthly payment.

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  Interest Rate