New American Funding's Buydown Mortgage vs. Buying Points
What's a Buydown Mortgage?
New American Funding offers a Buydown Mortgage where you can enjoy lower payments initially without any upfront costs. This option is great if you're looking for temporary relief during the first few years of your mortgage.
What Does Buying Points Mean?
Buying points means paying upfront to lower your interest rate and monthly mortgage payments. This one-time fee is paid at closing. It's a good option if you plan to stay in your home long enough to save more money than you spent on the points.
Types of Buydowns: Permanent vs. Temporary
- Permanent Buydowns: Pay more upfront to reduce your interest rate for the entire life of the loan.
- Temporary Buydowns: Lower your payments for a short period, typically the first few years, without upfront costs.
Is a Buydown Right for You?
Consider a Buydown Mortgage if you want lower payments at the start. It's ideal if you're looking for some financial flexibility early on.
Should You Buy Points?
Buying points might be a good move if you:
- Plan to stay in your home long-term.
- Expect your income to increase.
- Want to calculate when you'll break even on the cost of the points.
Pros and Cons of Buying Points
- Pros: Lower interest rates and monthly payments.
- Cons: Not beneficial if you move before reaching the breakeven point, upfront costs might be high, and it could divert funds from other uses like a larger down payment.
Do Mortgage Points Require a One-Time Payment?
Yes, mortgage points are paid once during the loan closing to reduce your interest rate. The lender decides how many points you can buy.
Are Mortgage Points Tax Deductible?
Yes, since points are considered prepaid interest, they can often be deducted as home mortgage interest. Check with your tax advisor for specifics.
Need More Info?
Contact New American Funding's mortgage team to discuss whether a Buydown Mortgage or buying points is right for your financial situation.
