Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Rates
What is considered a good rate and what rate did you lock in at? Are you happy with it? Did you/will you buy points? Does it make enough of a difference (buying points) to be worth it?
Sorry for the barrage of questions, but I just found out that we locked in at 3.75. My CS is a little under 700 (690) so I think its good for my score. I guess I still have the option of buying points...is it worth it at this point?
Re: Rates
We didn't buy points but our realtor gave us a great equation to use to determine if points are worth it or not.
First you need to figure out how much the points will cost you, typically you can do that by subtracting the different estimated closing costs between the rates. Then you find the difference between the monthly mortgage payment.
Cost of points divided by the monthly savings = the number of months to break even.
So let's say the points will cost you $1000 and you're monthly payment with the lower interest rate will be $10 less per month.
1000/10= 100 months
So it will take you 100 months or a little over 8 years to break even on what you paid upfront. If you plan on staying there forever or over 8 years, then paying for the lower interest rate now will be a good idea. If you don't think you'll be there that long, then paying points doesn't make sense as your monthly savings won't make up for the upfront money you paid.
Good luck!
That is a pretty good rate. When we locked in early May, we got 3.5% at 0.75 points (market rate on that day was 3.5 for 2 points, but we competed lenders against each other to lower the points). This is our forever home, so paying the point made total sense for us. We had the extra cash available without touching our emergency fund, which made it possible for us to afford even more cash upfront. According to the amoritization schedule we looked at, buying down our rate saved us $30k-ish over the lifetime of the loan. Even after buying the point, we're still looking at a savings of more than $25k.
As the PP said, buying your rate down makes sense if you plan to keep the house for a long time. But if this house is just a stepping stone for you, it probably does not make sense.
*double post*
Thanks for the replies, this is our first home and although I love it, I can't say I think it will be our "forever home". So this is a very good gauge for us.
Thanks again : )