Discount Points?

Discount points are used to buy down the interest rate. It is exactly as it sounds, you pay now, up front and the lender will give you a lower rate. Discount points are considered by the IRS as mortgage interest and the fee therefore is tax deductible (consult your CPA). 1 point is calculated as 1% of the loan amount. For example on a $100,000 loan x 1% = $1,000 added to your closing costs. Now the reduction in rate could actually save you thousands of dollars over the life of the loan and the IRS will return the initial grand you paid up front. Not a bad investment. But the numbers need to work out and you need to do your own figuring. If you have a scenario you want to run by me, post it here and I get back to you!