Points can be confusing for anyone who isn’t a mortgage or lending expert. This is why most people overlook the option of paying points on their Ohio refinance loan. The problem is, they also miss out on the opportunity to save money over the life of their loan. The information below can help you determine whether or not you should pay points on your refinance.
What are Points?
There are two different types of points that can be paid with an Ohio refinance loan: origination points and discount points. Origination points are required to pay for part of the closing costs and are paid to the originating lender. Discount points are optional points that can be paid to lower your interest rate. One point is equal to one percent of the loan. Paying these points does not change the amount you borrow, but it does buy down the rate used to calculate your monthly mortgage payments.
Reasons to Pay Points
If you have the money to pay discount points, there is no good reason not to do it. Interest rates on 30-year Ohio home refinance loans currently average 5.77 percent. For each point you pay, you lower your interest rate by approximately a quarter of an interest point. If you would be paying 5.77 percent, paying 2 discount points can lower your interest rate to 5.27 percent. This will in turn lower your monthly payments, as well as the total cost of the loan.
Reasons Not to Pay Points
If you don’t plan on keeping your home for much longer, paying points on your Ohio refinance loan can be a serious waste of money. Points come with an initial upfront cost. You will need to stay in the home for a certain amount of time for the interest savings to be worthwhile.
By: Jane A. Hale
Posts Tagged ‘Good Reason’
Ohio Refinance Loans – Should You Pay Points on Your Refinance?
March 26th, 2010Georgia Refinance Loans – Getting Approved for a Refinance Loan in Georgia
January 19th, 2010
The state of Georgia has one of the newest and strictest anti-predatory lending laws on the books. If you have a credit history that’s less than perfect, this new law may make it difficult to get approved for a Georgia refinance loan. Even so, this doesn’t mean that refinancing is impossible. Here are a few tips that could help you get approved for a refinance loan:
Find the Right Lender
Because the anti-predatory lending regulations in Georgia are so strict, some lenders and brokers have become reluctant to work with borrowers who have credit problems. The key to getting approved for a Georgia refinance loan involves finding a lender who is dedicated to working with you to get you the money you need. This could take a little work on your part. You may have the best luck with an online lender who specializes in bad credit Georgia refinance loans.
Show Just Cause
If you have bad credit and want to refinance your loan within the first five years of getting it, the law stipulates that you and your lender certify that the Georgia refinance loan confers “reasonable tangible net benefits”. This means that you have to have good reason for the refinance, i.e. lower payments, lower interest rate, etc.
Prepare to Succeed
If you want to increase your chances of getting approved for a Georgia refinance loan, you can take several steps prior to applying. First, pull a copy of your credit report and find out what your credit score is. Second, do everything in your power to remove negative items and increase your score. You won’t achieve results overnight, but within three to six months, you can whip your credit into better shape, and in turn, qualify for a lower rate.
By: Jane Hale