Mortgage? points

[PaulaSue]

HELP, Are they good to buy? We are planning on a 30 year mortgage(not comfortable with locking in the 15/20 year with prices going up) and pay off early and live there forever

 

[Fizzgig]

1 Point = 1% of the purchase price; aka, you're buying a $300K house, you pay 1 point at $3000 on closing day to get a .25 point decrease on your interest rate over 30 years.

If you buy points to lower the interest rate of your loan, make sure you already have at least 3% of your loan in the bank in addition to those points when you go to close the loan. That way you won't get surprised when the day you close you need to pay more than you were expecting even the DAY BEFORE CLOSING.

If you're pleasantly surprised to not get hit with 3% of the loan due the day you close, the day after you close, when the fridge that was left in the house dies, or the furnace dies, or the roof springs a leak, you'll be fine.

I only say these things due to hard won experience.