Buying Points On Mortgage Page

Buying mortgage points—also known as —is a strategy where you pay an upfront fee at closing to "buy down" your interest rate. This trade-off trades current cash for long-term savings, potentially reducing your monthly payments and total interest over the life of the loan. How Mortgage Points Work

: If the break-even is long (e.g., 8+ years), you might see a better return by investing that cash in a high-yield savings account or a 401(k). Key Considerations for 2026 buying points on mortgage

: You have enough cash for a 20% down payment (to avoid PMI ) plus the additional cost of points without draining your emergency fund. Buying mortgage points—also known as —is a strategy

: Each point usually reduces your interest rate by 0.25 percentage points (e.g., from 7.00% to 6.75%). Key Considerations for 2026 : You have enough

: One mortgage point typically costs 1% of your total loan amount . For a $400,000 mortgage, one point would cost $4,000.