Buy Down Points On A Mortgage — How To

: On your Loan Estimate or Closing Disclosure, these fees are often listed as "prepaid interest". Step-by-Step Guide to Buying Points

: You can ask the home seller or builder to pay for your points as a closing incentive, effectively buying down your rate at no upfront cost to you. how to buy down points on a mortgage

Example: A 6.5% rate could be lowered to 6.25% by buying one point. : On your Loan Estimate or Closing Disclosure,

: Divide the upfront cost of the points by your monthly savings to see how many months it will take to recoup the investment. : Divide the upfront cost of the points

: Ask your loan officer for a menu of interest rate options. This sheet shows the cost (in points) or credit associated with different rates.

Buying down points involves paying an upfront fee at closing to secure a lower interest rate for either a temporary period or the entire life of the loan. Core Mechanics of Mortgage Points