Need info about buying down interest on a mortgage. is it recommended for a lower monthly payment? is it tax dedductible in NM? What are the pros and cons? Help!
2006-09-06 06:28:56 · 6 answers · asked by Papi_79 2 in Business & Finance ➔ Renting & Real Estate
The buy down points are federally tax deductible....check with your state for a state deduction.
It is a good idea? Probably not. If you're considering it to ensure your cash flow, then you might want to consider a different, lower priced, house. The last thing you want is to end up in a house you can't afford, and buying down just raids your reserves.
2006-09-06 06:37:21 · answer #1 · answered by mzJakes 7 · 0⤊ 0⤋
If you are buying down the points, it will normally take you 2-3 years to break even.
If you are buying a house and you can negotiate for the sellers to buy down your rate, go for it.
Stats show that most people will either move or refinance their mortgage within the 2-3 years. So, be very careful about paying discount points unless you are 93.8% sure that you will not change your mortgage or sell.
The lower monthly payments are nice, but if you just keep the extra money in a savings account, it will be there if you need it and can even earn some interest income for you.
2006-09-06 10:15:38 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Well its depends on how long you are going to live in the house. Lets say that to buy down the rate a 1/2pt lower and it will cost you $x. Just subtract the difference between the two payments and divide that number by the $x and that will give you the amount of years till you break even.
$x/difference in payment = years till break even
2006-09-06 06:42:50 · answer #3 · answered by john . 2 · 0⤊ 0⤋
We did this once. Personally I think it's a waste of money, but I am in a different state, so not sure about the tax deduct thing. It will get you a lower payment for now, but if you can swing it, just wait and refi in 6 mths to a year...it would do you better than spending so much $ up front.
2006-09-06 06:32:43 · answer #4 · answered by nic_tammyscott 3 · 0⤊ 0⤋
How long are you planning to keep the loan without refinancing or selling the home? For most people, it's about two years, which means discount points, as they are called, are usually a poor investment.
2006-09-06 08:48:24 · answer #5 · answered by Searchlight Crusade 5 · 0⤊ 0⤋
i also recommend waiting to refi , also how long do you really plan on staying in your home? if not a whole 30 yrs- focus on paying the lowest pymnt on the house to save you money yur not gonna pay off the house any way right?......but if you do plan on paying of the house refi w/ the lowest rate and pymnt
2006-09-06 06:37:55 · answer #6 · answered by LA BORIQUA 3 · 0⤊ 0⤋