|INTEREST RATE||POINTS||PRINCIPAL/INTEREST (P/I)|
|A POINT= 1% OF A LOAN AMOUNT|
Each point in this example costs $1,000.
At a 7.0% interest rate your p/i is 660 and it costs you nothing
At a 6.5% interest rate your p/I is 632, you save $28 per month on your payment but you paid $2,000 in points to do this.
At a 6.0% interest rate your p/I is 600, you save $60 monthly on your payment but you paid $4,000 to do it
So, to save $60 per month it would cost you $4,000 to do so and you would not see a real savings for 66 months or 5.5 years. The moral of the story is try not to pay any points or origination fees (the same thing…different name) and if you do never more than one. If you need help email me.