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| Las Vegas Houses for Sale > Las Vegas Mortgage Rates |
What Are Mortgage Points and With Las
Vegas Mortgages Is It Smart to Pay Points?
Don't Hurt Yourself When Seeking a Las Vegas NV Mortgage
"Mortgage points can be good things," Sarah Kasson said knowingly. "That's because the more points you pay the lower your mortgage interest rate. The lower your interest rate the lower your monthly payment. Can you see how points paid directly affect Las Vegas mortgage rates then?"|
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Which begs the question. "Is it always wise to pay points then?" (Or more basic "What are mortgage points?") Or perhaps it's true that the more points paid to the Las Vegas mortgage company at the closing the better off you are? "Depends," said Sarah. "You see a "point" is one percent of the principal. Each point paid lowers the interest on your Las Vegas NV mortgage. Anywhere from an eighth to a quarter of a percent. It's like a buy down of interest." |
What you're basically doing is prepaying the interest. But this only makes sense if you plan to stay in the house long enough to reap the benefit. And there's the rub. In most cases paying mortgage points costs borrowers in long run. In other words most home buyers who pay point on their Las Vegas NV mortgage end up paying more interest than if they hadn't paid points. Needlessly incurring a self inflicted yet avoidable Las Vegas home loans cost.
You see things change. And too many are either moving, refinancing, or defaulting on the loan before they break even on their prepaid interest. (This logic applies with both first and second mortgages. Las Vegas, Henderson or elsewhere in the Vally too.
"We learned if you're not careful you're really enriching Mr. Bailey, the smiling branch manager at your local Las Vegas bank. As you end up paying more in points and interest than you would have by simply paying the interest as you go," Kasson noted.
How to avoid this? Work the numbers on your Las Vegas NV mortgage. Or at least have the mortgage broker or loan officer calculate the affect paying points has on your Las Vegas mortgage rates. And what it costs you to get that affect. You really want to know how long you'll have to stay in your dream Las Vegas house to reap the rewards of this tactic.
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