What does it mean to buy down points on a down payment?

Answer by  chickira (67)

Buying down points means to buy down one "point" (usually 1%) of your mortgage value. Basically you are reducing your percentage rate which reduces your payment. The money goes to the broker to pay their fees upfront. Otherwise the broker gets a certain percentage of collected monies over time.

Answer by  cdh0730 (29)

You buy down points on your mortgage, not the down payment itself. "Buying points" lowers your origination fee, which is a percentage of the loan. If you buy down your points, you can typically receive a lower interest rate on your mortgage.

Answer by  Darry (3853)

You can pay up front to purchase percentage points off of your interest rate. Basically, this is the only way to lower the interest for your loan.

Answer by  SandyG (807)

If you pay "one point" (or one percentage of the mortgage amount) you may lower your interest rate. That can save you a lot of money over 10 years.