I've had many clients who have lost the money they contributed to points. They planned to live in their homes for long enough to recoup the costs, however, unexpected job transfers, divorces, deaths, illnesses, growing families, etc., resulted in an earlier move than they had anticipated. Be sure to ask your lender how long you'd have to live in your house to "break even" before buying down. AngelaMortgage Rate Buydown Often Bad DealBorrowers who purchase points to lower the cost of their mortgages often end up paying more than they would have by avoiding points and taking a higher interest rate, a new study points out.
That's because many borrowers tend to overestimate the length of time they'll hold the mortgages, before moving or refinance, according to study co-authors Abdullah Yavas, a professor of business administration at Penn State's Smeal College of Business, and Yan Chang of Freddie Mac.
The report also finds that borrowers who buy points often treat them as costs they can never recover, so they're less likely to refinance.
Source: Associated Press (12/21/06)
# posted by
Angela May @ 10:52 PM
