Paying Points Doesn't Pay

FreddieMac.com reported interest rates inched up this week. The average rate on a 30-year fixed-rate mortgage was 6.21 percent compared to the previous week's 6.18 percent.

When rates inch up, borrowers become more interested in paying upfront discount points to reduce their interest rate over the life of the loan. One discount point is equal to one percent of the loan balance and is paid at the time of closing.

A new study by MarketWatch.com indicates that paying upfront points rarely saves the borrower money. You must weigh the upfront costs against the long term savings and most borrowers over-estimate the amount of time they will pay on the loan without refinancing or actually own the house.

If you are thinking of buying a home and are weighing your options concerning paying discount points, contact me. I'm glad to discuss this with you and assist with you with making a good home buying decision.

Also, visit KnoxCountyMLS.com to receive new Knox County real estate listings as they hit the market. It's fast, easy, convenient and FREE.