Refinance an Adjustable Rate Mortgage - Should Home Owners Pay Discount Points When You Refinance An ARM Mortgage
Paying Points On An ARM
Paying points is a good way for people with a fixed rate mortgage to get a lower interest rate. But does it apply to homeowners pondering an ARM mortgage. Discover how to accurately figure out if the points are going to save you or cost you money.
When you've finally decided it is the right time time to refinance an adjustable rate mortgage you are more then likely going to try and get the optimal deal on your home mortgage.What the best deal really is can more then likely be different between people, but what most will agree on is that obtaining the lowest interest rates is probably the most important part.One of the best ways to get the lowest loan rate is to pay points on the loan.If you currently have an adjustable rate mortgage and are thinking about another one you want to be positive you do not do the incorrect thing and end up costing yourself moneyPoints are a percentage of the total mortgage amount paid to the lender for a lower rate. What you need to do is figure out how much you will save every month by paying the discount points. Then multiply the amount by the total number of months that you have a fixed mortgage rate.If the amount you calculated figures out to be much more then it's going to cost you then paying points on an ARM it would probably be in the best interest to you. However do not just base this on the amount of the points paid, this is because when you pay points some home loan brokers lose there back end commission from the wholesale lender and have to charge you a loan origination fee up front.Not forecasting in any of the front end charges into your numbers could end up making you lose more then you save. To make sure that you are able to figure your savings precisely make sure to ask for a Good Faith Estimate that will show all the points and fee's you will be paying for the lower interest rate.