Mortgage rate buydowns and points
You can pay more at closing to pay less each month. The key is to compare break even math and your likely time in the home.
Two ways to lower the payment
- Discount points Pay extra at closing for a permanent lower rate.
- Temporary buydown A one year or two year step down that rises later.
When it may make sense
- You expect to keep the loan long enough to pass break even.
- You have seller credits that can cover points or a buydown.
- You prefer a lower payment now to grow savings after closing.
How to compare
- Ask your lender for side by side options with total cash to close.
- Calculate break even in months and consider refinance risk.
- Match the option to your three to five year plan.