Yes!!! You are exactly 100% correct. It does not always make sense. Especially in a high rate environment, if you are going to be refinancing in a couple of years. All depends on the math. Thanks for watching!
I have my MLO test this weekend and I’ve been trying to understand this concept for weeks. You finally explained it in a way I understood! Question though: is the point fee paid at the same time/with the down payment?
I'm so glad!!!! How did the test go? Yes, the points are paid at closing. A one time, non refundable fee, paid at the same time as down payment, closing costs, on the contract closing date.
At 2:57, I said quick math, oopos, but should have said I went to a mortgage calculator online. 300K for 30 years at 6.5%. i went to calculator.net Thanks for catching this!
At 2:57, I said quick math, oopos, but should have said I went to a mortgage calculator online. 300K for 30 years at 6.5%. i went to calculator.net Thanks for catching this!
Fantastic Question! You are referring to the 3:57 point in the video, explaining the recovery time of the upfront 3K paid to get rate from 6.5 to 6.125%. That 3.5 years is merely to say that if you choose the lower rate option of 6.125%, it takes 3.5 years to 'recover' your upfront money spent at closing of the 3K. The rate will always be the lower 6.125% for the life of your loan until you refinance or sell the home. It will not go back up to that higher amount, because you permanently bought down the rate with the $3K at closing. Let me know if I can clarify further! Amazing question! 😀
Hi Analisa. Thanks for watching! Thanks for calling out my 'lingo' . What I meant here , is that as you go down farther in rate, it takes MORE fees aka points, and gives you less benefit. So for example, if 1.0% points gets you initially .375% lower rate, it may not be true for 2.0 points to give you an additional .375% . etc. As you go down farther, the benefit is less. In an additional example, you could pay 4 points if you want, but that will not get you .375% x 4 (which is 1.5% in interest rate), it might only get you 1 in interest rate. ITs because the lenders really don't want to go down that far..there is no market for it. Those bonds are not trading. So they make it super expensive, hoping no one will choose it. Trying to explain simple here. Hope this makes sense. Thanks again for comment. I'll watch my lingo!
Absolutely you can! This video is made for anyone in general that wants to know what points are. There are still some people that buy points, for different reasons, and ask the question. Especially since almost ALL of the online lenders show lower than believeable rates, because they have points baked in. This video just explains what points are. You are CORRECT! better to pay 0 points, and refi in a couple years when rates go down.
@@LoanWithJenplease if you can answer, my lender did that a cash out loan to buy an investment property I have to buy points, and I absolutely dislike this and he said I have to buy it because it’s an investment property buy the way it is a conventionally loan
Really helpful video! Thank you Jennifer 😊
Thanks for watching Sal!
I have been trying to wrap my head around "paying points" for years and finally...a video that explains it simply. Thank you!
Thank you Dennis for the feedback! That was my intention. Its hard to understand for sure. Glad it helped.
This video was really knowledgeable. Very helpful, thank you
Glad it was helpful! Thanks for watching!
This is very helpful! Thanks for explaining this in an easy-to-understand way, Jen. Definitely subscribing!
THank you so much!!!!!!!!!!!!!!
Appreciate the numerical examples!
You are welcome. I always find it helpful to have examples... and in writing when it comes to money. Especially when you are trying to save it!
Now I understood better about points thank you
I'm so glad! Thanks for watching!
Buying points is really just prepaying a portion of the interest.
Yes!!! You are exactly 100% correct. It does not always make sense. Especially in a high rate environment, if you are going to be refinancing in a couple of years. All depends on the math. Thanks for watching!
@@LoanWithJen it also can be beneficial when it comes to taxes. Points can often be deducted on your Federal taxes.
Great explanation!!!! Thk you !
You are welcome!
Thanks for this video! What about factoring in how the amortization schedule changes with the lower rate?
Great suggestion! thank you!
Very clear in so short presentations
Glad you liked it, hope it helped. Thanks for watching!
wow that was great, thanks
Glad you liked it!
I have my MLO test this weekend and I’ve been trying to understand this concept for weeks. You finally explained it in a way I understood! Question though: is the point fee paid at the same time/with the down payment?
I'm so glad!!!! How did the test go? Yes, the points are paid at closing. A one time, non refundable fee, paid at the same time as down payment, closing costs, on the contract closing date.
Quick Question! I know you said you did quick math but could you please show how you got the new monthly payment to be $1,822?
I have the same question
At 2:57, I said quick math, oopos, but should have said I went to a mortgage calculator online. 300K for 30 years at 6.5%. i went to calculator.net Thanks for catching this!
At 2:57, I said quick math, oopos, but should have said I went to a mortgage calculator online. 300K for 30 years at 6.5%. i went to calculator.net Thanks for catching this!
@@LoanWithJen thank you!
I would love if you can analyze my closing documents estimate
Hi Lysette, sure, email it to me with a brief summary jennifer.hernandez@legacymutual.com
Thank you! This video and the example used to explain the savings when paying for points as opposed to the par rate was very helpful!
Great to hear! Thanks for watching!
So after the 3.5 years the loan interest will be back to 6.5%? thank you
Fantastic Question! You are referring to the 3:57 point in the video, explaining the recovery time of the upfront 3K paid to get rate from 6.5 to 6.125%. That 3.5 years is merely to say that if you choose the lower rate option of 6.125%, it takes 3.5 years to 'recover' your upfront money spent at closing of the 3K. The rate will always be the lower 6.125% for the life of your loan until you refinance or sell the home. It will not go back up to that higher amount, because you permanently bought down the rate with the $3K at closing.
Let me know if I can clarify further! Amazing question! 😀
No good this point thing is garbage
Diminished return?? Where does the money go? I thought it went towards loan😂? The lender pockets the fee?!
Hi Analisa. Thanks for watching! Thanks for calling out my 'lingo' . What I meant here , is that as you go down farther in rate, it takes MORE fees aka points, and gives you less benefit. So for example, if 1.0% points gets you initially .375% lower rate, it may not be true for 2.0 points to give you an additional .375% . etc. As you go down farther, the benefit is less. In an additional example, you could pay 4 points if you want, but that will not get you .375% x 4 (which is 1.5% in interest rate), it might only get you 1 in interest rate. ITs because the lenders really don't want to go down that far..there is no market for it. Those bonds are not trading. So they make it super expensive, hoping no one will choose it. Trying to explain simple here. Hope this makes sense. Thanks again for comment. I'll watch my lingo!
1% = 100 basis pts.
Thanks for this! I will fix my words on the 2024 remake!
I thought 1 point reduced the interest rate by 0.25% meaning a 6.50% rate with a 1 point buy down would be a 6.25% interest rate.
Why can't you just get a loan with a fixed interest with 0 points and just refinance at a later time when interest rates have gone down?
Absolutely you can! This video is made for anyone in general that wants to know what points are. There are still some people that buy points, for different reasons, and ask the question. Especially since almost ALL of the online lenders show lower than believeable rates, because they have points baked in. This video just explains what points are. You are CORRECT! better to pay 0 points, and refi in a couple years when rates go down.
Buying points is a scam it stupid
@@LoanWithJenplease if you can answer, my lender did that a cash out loan to buy an investment property I have to buy points, and I absolutely dislike this and he said I have to buy it because it’s an investment property buy the way it is a conventionally loan