Mortgage Points Allow Homebuyers to Buy Down Rates, But Come With Tradeoffs
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By purchasing mortgage points, homebuyers can reduce their interest rate by half a percentage point or more. This involves paying a fee to the lender to buy down the rate.
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With inflation still high in January, expectations for an interest rate cut have diminished, meaning rates will likely stay elevated for now.
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Mortgage points allow buyers to reduce rates but have drawbacks like extra fees and possibly not being worth it long-term.
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Adjustable-rate mortgages start with lower rates but eventually adjust higher, so they may be an option.
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Improving your credit score, shopping around for lenders, and considering points can help secure a below-average mortgage rate.