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To Pay Or Not To Pay, That Is The Question"We can offer 6.5% with 2 points, or 6.75% with one point. Which do you prefer?" Have you heard this before? A huge question that home owner's and buyer's alike ask me all the time, is "Should I pay points or not?" The simple answer to that question is, "it depends." There are several factors that should be taken into account when deciding whether or not one should pay points. The biggest factor is the length of time one will own the home. To discover the answer one must simply find out how long it will take in order to recover the initial cost of the points. For those that are new to the home buying experience, a point is calculated as one percent of the loan amount. For example one point on a $100,000 mortgage would be the equivalent of $1,000 and 2 points would be $2,000. By paying a point or two one can reduce the interest rate of their mortgage. If that person is planning on buying this home and living there for the entire thirty years of his or her mortgage, I would suggest paying the point. For instance using the same figures as above, if the rate with 0 points is 7%, the rate for 1 point is 6.75%, and the rate for 2 points is 6.50% then the difference in interest paid over 30 years would be as follows. Over thirty years one would pay $139,510.98 in interest with no points, $133,493.79 with one point and $127,543.01 with two points. As you can see, the difference between paying zero points and paying two points is $11,967.97 over a 30 year period. The answer to the question, which as I said is, "it depends" is based on how long you will have the loan for. The break even number in the example listed above for either one point or two points is approximately 60 months. In other words, if you have the mortgage for more than five years, you will begin saving money. If for some reason you are out of the house prior to that five year period it was more expensive to pay the points than to finance at the higher rate. In other words, five years from the date you took the mortgage out, the amount of interest at the 7 percent would be equal to the amount you paid in points. Based on all of this information, the best answer can only be found by asking yourself. If you plan on living in this home for thirty years and never refinancing, then paying the points is the right answer. If you think you will be moving over the next few years than finance without the discount points. Copyright 2006 Jason P Bertrand Other articles by this author »
About Jason P Bertrand
Jason Bertrand is the President of JPB Financial Services, Inc., a Connecticut Corporation and member of the Better Business Bureau. He has over a decade of experience in the financial services industry and is a Notary Public in the State of Connecticut. Please visit the following sites: Feel free to contact Mr. Bertrand with any questions or concerns through jbertrand@emortgageloanstore.com, or mail to: JPB Financial Services, Inc Related
And here is another random article you might be interested in... How do you Find a Topic to Speak On?People are always looking for solutions to their problems. Do you have an expertise that can help people solve their challenges and frustrations? Ask people to see what bothers them. Find out what they need to achieve their goals. First, you must have a passion for what you would like to speak on. Next, see if your topic would be welcomed and needed by many people. Then come up with a speech that presents several points (ideas) to help people take action, think differently, get from A to Z. Start collecting material â€" stories and concepts are everywhere. Find them in the supermarket, at a restaurant, on an airplane, at a movie, in your home with your family. You must write down everything you hear or see related to your topic. Purchase a mini-cassette recorder and carry it with you as you would your cell phone. Place a pad and pencil by your bed nightstand and when you get an "aha" in the middle of the night, get up and write it down. Retrieve and retell these stories to your audiences. Find that one special "signature" story that belongs to you and sets you apart from other speakers. You know, the one that people will love to hear because it is inspiring, motivating, and/or humorous. Then they will remember you and refer you to others and ask you back again. Are you ready to take the challenge to provide a thought-provoking presentation that will get people to think differently, to be inspired to take action, to garner insights about their lives, to question some of their goals? Perhaps Marcel Proust said it best. "Instead of seeking new landscapes, develop new eyes." Would you like to be a sought after public speaker? Need some help? Let my 13 years as a speaker bureau owner guide you. Email me for a 30 minute complimentary coaching call. sandra@schrift.com Join a fre*e Teleclass to learn how to speak like a pro on June 30, 2004 from 8-9 p.m. (EST) http://www.schrift.com/teleclasses/index.htm ©2004 by Sandra Schrift. All rights reserved Publishing Guidelines: You are welcome to publish this article in its entirety, electronically, or in print fre*e of charge, as long as you include my full signature file for ezines, and my Web site address (http://www.schrift.com) in hyperlink for other sites. Please send a courtesy link or email where you publish to sandra@schrift.com Thank you. Other articles by this author »
About Sandra Schrift
Sandra Schrift 13 year speaker bureau owner and now career coach to emerging and veteran public speakers who want to "grow" a profitable speaking business. I also work with business professionals and organizations who want to master their presentations. To find out How to Become a Highly Paid Professional Speaker, go to http://www.schrift.com/ProfessionalSpeaker/. Join my free bi-weekly Monday Morning Mindfulness ezine http://www.schrift.com/monday.htm Related
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