are you familiar with the concept of points in mortgages?
Not a clue
points reduce the interest rate
1 point usually reduces the interest rate by 1/4 of a percent or 1/8 of a percent
so if you don't buy any points up front, the interest rate is 5.88% if you do buy 3 points, then the interest rate is 5.13%
each point is 1% of the mortgage amount
each point costs you 1% of the mortgage amount
got it! so how do I solve this? in stupid words please :)
1% of $382,300 = 0.01*382,300 = 3,823
each point costs $3,823
but it looks like we're ignoring this cost for now
what is the monthly payment if... mortgage amount = $382,300 number of years = 30 annual interest rate = 5.88%
would I use the calculator from the bankrate website for mortgage?
ok good in that case, first payment I got 2,082.75
is that with the points? or without?
it's with the points making the rate 5.13%
ok how about without the points
Without the points making the rate 5.88% the payment is 2,262.67
I'm getting the same monthly payments
ok. now what happens?
1 point costs 1% of the mortgage how much does 3 points cost?
take 3% of the mortgage
3% of $382,300 = ??
yes and I got 11,469
With 3 points Total Cost = (monthly payment)*(# of months) + (cost for points) Total Cost = (2,082.75)*(360) + (11,469) Total Cost = 761,259
With 0 points Total Cost = (2,262.67)*(360) Total Cost = 814,561.20
Amount you save = (total cost with 0 points) - (total cost with 3 points)
and now I just subtract the two?
I'm ignoring the down payment because it's the same for both so they subtract and cancel off
got it! I might have more later but for now thanks again! :)
My Final Answer and Correct Answer!! $53,302!