With homes becoming increasingly unaffordable, more buyers are using an increasingly popular strategy to lower their mortgage rate.
Buying points — also referred to as "discount points" or "buying down the rate" — involves paying extra to your lender at closing to reduce the interest rate on a mortgage.
That reduced rate results in smaller monthly payments and long-term interest savings over the life of the loan.
A larger down payment reduces the total loan amount, which also has the effect of lowering monthly payments.
Ultimately, whether a larger down payment or buying points will actually lower your monthly payments depends on your specific loan terms.
Persons:
That's, Aaron Gordon
Organizations:
Guild Mortgage