Discount Points Explained For Your Mortgage - Are They Worth It?

Discount Points Explained For Your Mortgage - Are They Worth It?

– On this video, I'm gonna talk about
mortgage discount points, explain what they are for your mortgage and if they're worth it or not. So we're getting started right now. Hey what's going on? Welcome back to the channel. I'm Emmett Dempsey,
mortgage broker and owner of Treasure Coast Mortgage here
in Port Saint Lucie Florida. And welcome to another video. On this channel I talk
more about mortgages, the home buying process and some cool things
around Port Saint Lucie and the Treasure Coast.

So if you're new here, please
think about subscribing. Okay, mortgage discount points, what are they for your mortgage? Are they a good idea? I'm sure you've had those questions. So a mortgage discount point, first let me give you a definition. A one point is 1% of the loan. So a $100,000 loan, 1% is $1,000. So what a mortgage discount point is, for $1,000, you're gonna buy what's called 'buying down your rate.' So I'm gonna give you an example. Say you get quoted what's
called a "par rate", if you can imagine a seesaw that's even.

That's a "par rate", that's what means no discount
points, no point rate. Let's just say it's 4%, which
is the undiscounted rate. And of course that interest rate's gonna be based off of your FICO, what loan type you're doing,
how much you're putting down so all those different things as you know. But this is just an example. So let's say it's 4%, which
is the undiscounted rate.

dempseymortgage.com

So, say you wanna pay one
point to get down to 3.75, so you have to do the payment difference between 4% over 30 years or
15 years or whatever it is versus 3.75 over 30 years. So, that's really the math about whether a discount point works. And the answer I give to all my clients is always "it depends." It depends on your goals, depends on what you wanna accomplish, depends on your monthly cash flow needs. If that payment that we quote is too high, then we need to get it down. Maybe buying it down
if you have the capital or if you're getting a seller credit, you know a seller concession from the seller can
help buy down your rate. So, everything in mortgages
is always "it depends." That's my answer generally to everything.

It always depends on your
personal financial goals. So that's where I always start with. And I always try and lay
out your goals visually you know on a system called MortgageCoach. I know if you work with me a lot, and there's a link in the
description about that. Go and leave a comment if
you ever had any questions about points, if you pay points. You know, definitely
go and leave a comment. I appreciate it. But really, a discount point
is an exchange of interest, you're prepaid interest today
in exchange for a lower rate throughout the life of the loan. So that's in a nutshell
what a discount point is.

If you want your own consultation whether discount points are good for you, go to my website dempseymortgage.com
and give me a call. Thank you so much for watching and I'll see you on the next one..

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