Mortgage Points: A Wise Investment for Physicians?
When diving into the world of home loans, physicians often come across the concept of mortgage points, also known as discount points. But should you, as a physician, consider purchasing these points? Let’s break it down.
Understanding Mortgage Points
A mortgage point represents 1% of your loan amount, purchased to reduce the interest rate on your mortgage. Each point usually reduces the rate by 0.25%.
Pros of Buying Mortgage Points
Lower Monthly Payments
By reducing your interest rate, mortgage points decrease your monthly mortgage payments, leading to substantial savings over time.
Tax Deductions
Mortgage points can often be tax-deductible, which may further increase your overall savings.
Cons of Buying Mortgage Points
Upfront Cost
Buying points requires a significant upfront payment, which might be a challenge for some borrowers.
Long Break-Even Period
The cost of the points is offset by the monthly savings, but reaching this break-even point can take several years.
Should Physicians Buy Mortgage Points?
As a physician, consider the following factors:
- Longevity of the Loan: If you plan to stay in the home and hold the mortgage for a long time, buying points could lead to significant savings.
- Cash Availability:*Do you have enough cash to purchase points after accounting for the down payment and closing costs?
Let’s Discuss Your Mortgage Strategy
Confused about mortgage points? Schedule a Curbside Consult today. We’re here to help you understand and navigate the complexities of physician home loans. If you’re short on time, simply fill out our consult form to be matched with a mortgage expert who can guide you.
For more information on mortgage points and how they work, check out this article by Investopedia.
Make Your Money Work for You
By understanding and strategically using mortgage points, you can make your money work for you and potentially save thousands over the life of your loan.
Disclaimer: This blog post is for informational purposes only and does not constitute financial, legal, or professional advice. Please consult with a real estate or financial advisor before making any investment decisions.