Should You Buy Mortgage (DISCOUNT) Points?

One of the most commonly referred to aspects of obtaining a mortgage is the all-important issue of "points." If you're in the market for a new home, or if you're looking to purchase for the first time, you've undoubtedly heard of them before, although you may have no idea what it means, or what "points" even refers to. Let's start at the beginning.  When you hear someone talking about mortgage points, they are speaking in reference to "discount points." In the most basic sense, one point is equal to one percent of the amount you are planning to borrow. So for example, if you were getting a loan for $150,000, then one point would be equal to $1,500. After that is when it gets tricky, so pay attention. When you purchase points, you are basically making the decision to prepay part of your mortgage interest.  If that doesn't make sense, look at it this way.  For every point you buy, your lender will offer you a lower interest rate. The actual amount your interest rate will drop can vary, but in most cases its is approximately 1/4 of a percentage point per every discount point you ...