Infographic: How Do Mortgage Points Work?

Wondering how mortgage points work? Learn how buying points can save you thousands of dollars over the life of your loan.

By: Navy Federal on September 6, 2016

If you’re a homebuyer, then it’s easy to save thousands of dollars. You just need to know where to look. One of the easiest ways (given the right financial means) is through mortgage points.

Lower a Key Monthly Payment

You’ve likely heard of “buying down” the interest rate on a mortgage or paying up front for points. They are one and the same. You can use mortgage points to your advantage and lower the overall cost of buying a home. If you can pay more than the minimum down payment on a home, then look to purchase as many points as you can and still meet your savings goals. A point is a fee equal to one percent of your mortgage loan amount. The point is typically included in your closing costs—it pays a portion of the future in advance. This is then reflected in the lower interest rate you’ll pay each month for the length term of the loan.

Are you still asking yourself, “How do mortgage points work?” Take a closer look through the infographic below and then find out how much you can save with mortgage points.