Homeowners are getting the wrong idea from today’s mortgage rates, new data says
‘Buying points can be a valuable option.’ Here’s exactly who should — and should not — buy mortgage points
Mortgage points, also sometimes called discount points, are essentially fees a borrower pays a mortgage lender to reduce the interest rate on their loan, which also lowers their monthly payment. Each point typically lowers the rate by about 0.25%, though this varies; so for example, buying one point might lower a mortgage rate from, say, 4% to 3.75% for the duration of the loan. “When taking out a mortgage for a new home purchase, buying points can be a valuable option for a borrower to help lower their interest rate and ultimately lower their monthly payment,” says Jonathan Lee, senior director of mortgage sales for Zillow Home Loans.