When Should You Pay Discount Points?

When you pay a discount point, you are essentially paying part of your interest to the lender/investor up front. This will lower your interest rate - as well as your monthly payment - over the life of the loan. One discount point is typically equal to 1% of the loan amount. For example, one point on a $100,000 loan would require payment of $1,000 at closing. Generally speaking, the longer you plan to remain in a property or hold your mortgage, the more advantageous it is to pay points. There is no requirement to pay discount points; whether or not you decide to pay points is completely up to you.  Typically, it takes 4-5 years to recapture the cost of paying a point.  Ask your HomeQuest mortgage consultant to review points with you.