Not a fan of points.
I would take the 10K, and take advantage of a refinance with little cost when it presents itself in the future.
Stevie said:
I would take the 10K, and take advantage of a refinance with little cost when it presents itself in the future.
Thanks for sharing. I’m leaning towards $10.50K actually. Not a fan of points. Would cover most of closing.
For 1. What’s the rate if you use 10k to buy points
Ainsley said:
For 1. What’s the rate if you use 10k to buy points
For a fair comparison of all rates, because you can increase rate and get cash
Ainsley said:
For 1. What’s the rate if you use 10k to buy points
Actually $10.50K builders credit for closing
No points @7.125%
6.875% @ 1 point
6.75% @ 1.25 points
Not a fan of points. $10.50K would pay for most of closing with builders lender
Thanks for the sanity check
Can you tell me why you don’t like points? What is the difference in the mortgage payments? How long will it take to make up the difference of $10k closing you are losing if you go with Nav Fed? Is this Mid Atlantic builders?
@Sam
Mid-Atlantic my USA region. Not builder. I’m a fan of covering all closing instead. Here’s the buy-down from the builders lender
No points 7.125%
6.875% with 1 point
6.75% with 1.25%
Hope to refi instead
“marry the price and date the rate”
You can REFI later. The $10k in equity up front is better
Davi said:
“marry the price and date the rate”
You can REFI later. The $10k in equity up front is better
Depends on the loan amount. On a $1M home with 20% down, would be a $330 difference in interest each month.
In this case, if OP doesn’t refi to 6.625 or less in 30 months, they will be better off taking the lower rate. Maybe add a few months to cover the lost gain of the investing the $10K in the market.
None of us know when rates will come down, and to what degree.
OP, just run the numbers for your case and decide.
@Kemper
Thanks OP. Great scenario. To use your hypothetical. If you half your example. Say $500K home. 60 months break even. Did I do the math correct? Delta $165 month.
Mal said:
@Kemper
Thanks OP. Great scenario. To use your hypothetical. If you half your example. Say $500K home. 60 months break even. Did I do the math correct? Delta $165 month.
Sounds about right. It’s a simplification but it’s a good start.
Additionally, refinancing incurs a cost. At which point you’ll run a similar calc and say - am I going to stay in the house long enough that the future interest reduction each month to overcome the one-time cost of refinancing.
So double the timeline it to be safe.
@Kemper
You rock. Thanks for the pro tip. Back of the napkin. Refi when rate drop 1% or more, typically?
Davi said:
“marry the price and date the rate”
You can REFI later. The $10k in equity up front is better
Thanks for sharing. Icing on the cake. Builder lender closing credit $10.50K would almost pay for all of closing.
@Mal
I’m also operating under the assumption that rates will come down in the next 2-3 years. Going from 7% to 3.5% can be a pretty big change in the monthly payment
how about a local lender?
Bailey said:
how about a local lender?
Yes. Local. Builder’s lender. $10.50K closing credit. Just not a fan of points. Higher rate. But almost covering all of closing with credit.
Bailey said:
how about a local lender?
Yes. Local. Builder’s lender. $10.50K closing credit. Just not a fan of points. Higher rate. But almost covering all of closing with credit.
You would’ve gave me that closing cost anyway most likely but I don’t know your local market