If you are buying a home in Grand Rapids, you should be aware of how the accumulation of mortgage points can help or hinder you. Mortgage points can have a positive or negative impact on you during the home purchasing process. You can control the impact of points on your purchase by understanding how points function. Grand Rapids home buyers can choose to use low rate/high point loans or high rate/low point combinations.
The Basics of Mortgage Points
Basically, mortgage points are fees that you pay to the lender in order to secure a reduced interest rate. By paying enough fees, you may be able to lower you monthly mortgage payments. A point amounts to one percent of the total mortgage amount that you seek to obtain. A fee allows you to pay for some of the interest upfront to defray the cost of the monthly mortgage payments.
When you want to buy a home in Grand Rapids, it is helpful to run through a few calculations to see how mortgage points may impact your purchase. Many lending websites now feature mortgage point calculators that can help you determine the total amount of your monthly mortgage payment after the payment of fees.
Low Rate & High Point Loans
If you can meet the minimum cash requirement for a mortgage, then you will likely want to use low rate/high point loans. The typical buyer who utilizes this method will remain within a home for many years.
High Rate & Low Point Combinations
Those who are unable to afford the down payment for a home may use the high rate/low point combination. This type of homeowner may be purchasing the property for investment purposes or does not anticipate living in the property for a long duration of time.
Contact A Mortgage Loan Professional
A lender can help you compare all of your mortgage options. By speaking with a lender, you can learn about the differences amongst mortgages. A lender can also help you choose a mortgage that may work best for your financial situation. Lenders can help you assess the impact of points on your home purchase and if it is right for you.