30 December 2006

A Risk That Few Should Gamble

Should You Pay Points on Your Mortgage?
This is the easiest question to answer : No.

The results of a recent study suggest that only 1.4 percent of people who obtain a new or refinanced an existing mortgage held their loan long enough to reach the break-even point.

An equally tiny 1.5 percent of people (who did not) should have paid points.

It's that simple. Take the higher interest rate. You'll be refinancing or selling before you reach the break even point.

Remember : Points paid on a purchase loan can be deducted (in total) from your Federal Taxes for the year of the purchase. Points paid on a refinance loan can be written off (amortized) over the life of the loan.


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