Trade Interest for Points

Interest rates and points on a loan are a balancing act. The more of one you pay, the less of the other you are stuck with. Many real estate gurus suggest you ask a lender for a lower interest rate by paying it down in the form of points. Sometimes this works, but sometimes it doesn’t. The reason it doesn’t is the lender is simply getting the equivalent of the interest savings up front in the form of points. A better way to save money is to make at least one extra mortgage payment a year. You will pay off your loan quicker and save a ton of money.