Is Buying Mortgage Points Worth It?

Is Buying Mortgage Points Worth It?

Did you miss the latest Ramsey Show episode? Don’t worry—we’ve got you covered! Get all the highlights you missed plus some of the best moments from the show. Watch debt-free screams, Dave Rants, guest interviews, and more!

Check out the show at 4pm EST Monday-Friday or anytime on demand. Dave Ramsey and his co-hosts talking about money, careers, relationships, and how they impact your life. Tune in to The Ramsey Show and experience one of the most popular talk radio shows in the country!

Ramsey Network (Subscribe Now!)

• The Ramsey Show (Highlights):

[OIPIO]

I’m going to be honest, I might have to watch this a few times to have it make sense 😂

[colin]

A few years ago Dave was saying that getting a point might be a good decision. It really just depends on the market and your specific situation. Do that math and figure out the break-even point.

[orlandocarrillo]

Depends on whether you will keep the property for the long run or sell quick. Where will you break even? Simple math. I paid $4.5K for a 1.5 percent reduction, I plan to keep this property for life. I did the math and I will be saving over 75K in the life of the loan.

[GTRrocker]

But wouldn’t buying points on a home you plan on living in for 30 years make sense because it’s saving you interest in the long run?

[nloncto]

This was when rates were in the 2%-3% range which would be silly to do so... I'd like to his his opinion now if someone was looking to buy their "forever" home because in my head that would definitely be worth it.

[ThePeterDislikeShow]

Even at 0.25% it's probably better to take the money and add it to your down payment. That way there is less money to be charged interest on in the first place (and every month hereon in!). Plus that money is yours to keep when you sell.

[Izael]

Anyone else notice how Dave no longer responds, "Better than I deserve" when asked how he is doing?

[John_Hoover]

So we’re just not gonna talk about how amazing that guy’s voice is??

[moneybee]

Dave saying "Cray-Cray" is exactly what I needed to start the weekend!

[alienresearchlab]

I was semi-pressured to buy points for a lower interest rate on my mortgage. I felt like I was at a car dealership that was trying to upsell me so I knew something was up. 'Well, if you buy these points, you get a lower rate." Yeah, but it's all just math depending on how long you expect to own the home. Points are just you paying interest up front for a lower rate. I say, go zero points and just take the prevailing market interest rate. Of course your friends at work will tell you how they got in at a lower rate but they won't tell you they paid $8, 000 up front to do it.

[karissa]

I have been struggling to understand how lenders were estimating the break even point with buying down the rate or purchasing points. This video just helped me understand it in 2 minutes!

[ctg]

Why not just keep it simple? Shop for the best interest rate and use extra money to finance less or make extra principal payments instead of buying down the interest rate.

[joeb]

I agree with Dave and Chris. They explained it very well. From what I've seen, it is almost always a bad idea to pay down the interest rate with points. Most people will sell the house or pay off the mortgage (if you follow Dave's plan) before they break even.

[JordanWilliamsN]

If I could reply to this with a meme. It would be the math meme lol

[eddiebarragan]

Fyi just because your current lender holds the existing mortgage does not mean that they will be more efficient in processing your loan. All they have is your signed note “contract” copy of your homeowners insurance policy and mortgage statement which you can easily send to a new lender if they are offering better terms. Every lender will treat your application as a new application. More importantly choose the right loan officer. Not just the company. We all know how to run but we can’t all be Usain Bolt.

[devinparker]

Try watching this at 1.75 times normal speed....its a trip!

[luisguzman-bcmk]

3:42 mans got that "Arbys, we have the meats!..." voice 😂

[bigbenisdaman]

I always thought when you bought "Points" it was paid to the mortgage, never knew it was just prepaid interest.

[joshuarivera]

I paid 5000 to drop my rate from 5.25 to 4.5, with that I would save 116 a month on my mortgage. Did my math and I calculated that I would recoup my 5k in 43 months or 3.5 years. I don't think that's to bad to get my money back. I'm 30 year fixed BTW

[beastfromtheeast]

You have do the math between with points paid vs no points paid. I like to do after 5 years after ownership. If the points paid pays off within 5 years and you plan on living there 10 years then yes it’s worth it.