Discount points
Discount points, also called points, let you lower the interest rate on your home loan. When you buy a point, you are purchasing a lower interest rate. One discount point will cost you 1% of the loan amount.
Should you buy points?
You get a lower rate when you buy points but you also owe more at closing. So you'll want to make sure buying points makes sense for you over the long term.
Thinking about buying points? Ask yourself:
- How much will discount points add to my closing costs?
- How much lower will my monthly mortgage payment be if I purchase discount points?
- Will you be in your home long enough to break even?
See how points could lower your mortgage payment:
| 1 point purchased | No points purchased | |
|---|---|---|
| Months Required to Break Even | 34 | n/a |
| Purchase Price | $250,000 | $250,000 |
| Down Payment | $50,000 | $50,000 |
| Loan Amount | $200,000 | $200,000 |
| Interest Rate | 4.25 | 4.75 |
| Points Paid to Lower Rate | 1 | 0 |
| Closing Cost for Points | $2,000 | $0 |
| P & I Payment | $984 | $1,043.29 |
| Monthly Payment Reduction | $59.41 | $0 |
If this homeowner bought 1 point, it would take 3 years to break even. Find out how long it will take after you refinance to break even.
To find out how much discount points can reduce your rate, please call a Loan Specialist:
1-877-941-4622 see hours of operation.
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Fixed Rate Mortgage
A fixed rate mortgage gives you the security of knowing that the principal and interest of your monthly mortgage payment won't change over the life of the loan. No wonder it's the most popular home loan.
- Lock in a low rate
- Stability of fixed monthly payments for principal and interest
- Option to buy an even lower interest rate with discount points
- Down payments as low as 10%-20% of home's value
- No prepayment penalties if you pay off the loan early
- Pick a popular term (10, 15, 20, 25, 30) or choose your own term (e.g. 17 years)
- Available in Conventional, FHA, VA, and Jumbo Loans
A Fixed Rate Mortgage may be right for you if:
- You plan to stay in your home for 7 years or more
- You prefer consistent principal and interest mortgage payments
- You have at least 10-20% of your home's value to use as a down payment
If that sounds like you, then a Fixed Rate Mortgage may be a good choice.
Adjustable Rate Mortgage (ARM)
An Adjustable Rate Mortgage, also known as a Variable Rate Mortgage, offers a lower initial interest rate for 3, 5, or 7 years. After that time, the rate may vary and the payment may increase annually, depending on the current interest rate. This means the principal and interest of your monthly payments could go up or down.
- Typically lower initial rates than other loans
- Security of knowing the principal and interest of your monthly payments for the initial period of your term
- Rate caps protect you by limiting the amount your rate can increase
- No prepayment penalties if you pay off the loan early
- Available in FHA and Jumbo Loans
An ARM may be right for you if:
- You plan to relocate or refinance in the next 5 to 7 years
- You anticipate major lifestyle changes such as a an increase in income
- You are willing to accept the risk of future interest rate changes
If that sounds like you, then an Adjustable Rate Mortgage may be a good choice.
FHA Loan
If you are a first time homebuyer or are worried about not having a large down payment, then the FHA Loan may be a good loan for you. Backed by the Federal Housing Administration (FHA), federally insured loans like the FHA often mean lower down payment requirements and flexible qualifications.
- Down payments as low as 3.5% with upfront, monthly mortgage insurance premiums (UMIP, MIP)
- Flexible income and credit qualifications
- No prepayment penalties if you pay off the loan early
- Use gifts of money from family, friends, and employers for your down payment or closing costs
An FHA Loan may be right for you if:
- Have little savings for a down payment?
- You need more flexible approval guidelines
If that sounds like you, then an FHA Loan may be a good choice.
Learn more at the Federal Housing Administration website.
VA Loan
Veterans and active members of the armed forces often buy with $0 down and less red tape. Backed by the U.S. Department of Veterans Affairs, VA Loans allow for some of the most flexible qualification guidelines exclusively for members of the armed services or their surviving spouse's. Pay a small upfront VA funding fee and get straightforward qualification requirements.
- Security of fixed principal and interest monthly payments
- Low closing costs — a limit set by government regulation
- No upfront or monthly mortgage insurance (UMIP, MIP) required
- No prepayment penalties if you pay off the loan early
A VA Loan may be right for you if:
- You are a veteran, reservist, active duty service member, or a surviving spouse of such a person with a Certificate of Eligibility
- You would like to buy your home with little to no money down
- You want the peace of mind of stable principal and interest monthly payments
If that sounds like you, then a VA Loan may be a good choice.
Learn more at the Department of Veterans Affairs website.
Jumbo Loan
Jumbo Loans offer competitive rates on home loans more than $417,000 ($625,000 in Alaska and Hawaii), which is the current conforming limit.
- Available in Fixed Rate and Adjustable Rate Mortgages
- Flexible fixed rate terms - pick a popular term (10, 15, 20, 25, 30) or choose your own (e.g. 17 years)
- Experienced Loan Specialist licensed in your state
A Jumbo Loan may be right for you if:
- You are looking to buy a home over the conforming limit in your area.
- You want great service with your larger loan.
If that sounds like you, then a Jumbo Loan may be a good choice.
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