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 ‘Lower Your Monthly Payments’
Ohio Refinance Loans – Should You Pay Points on Your Refinance?
March 26th, 2010Refinance Car Loans to Save You Money in a Recession
December 5th, 2009
It still looks like the recession has a bit of way to go. However, there is a way you can take advantage of the current economic conditions. Because interest rates are at their lowest point in years the cost of borrowing money is low.
Therefore it could be a good to get car loan refinancing either now or just as the Fed starts to raise the rates.
What Is Car Loan Refinancing?
Many people are not familiar with refinancing auto loans. Auto refinance loans are quite similar to the home refinance loans.
When you’re refinancing auto loans you’re borrowing money at a lower interest rate from a different lender. You will then use this money to repay your current loan and then you will repay the refinanced loan at a lower Annual Percentage Rate. And because the APR is lower, your monthly payments will be smaller.
The really good news is that not only will you pay less each month, if you refinance car loans you might also be able to save hundreds, if not thousands of dollars over the life of the new loan.
Bad Credit Auto Refinance
Some people wonder if they can refinance car loans if they have bad credit. This is probably one of the best reasons to get car loan refinancing.
Bad credit auto refinance is often offered at a substantially lower APR than the original loan. If your credit is challenged you may want to look into this option. The only time you might not want to consider auto refinancing loans is if your original APR is really low or if your loan is almost paid off.
However, even if you got 0% APR from an auto dealer, it’s often for a maximum of only three years. Since many people prefer to pay back their automobile loan over a longer period of time, even refinancing a zero interest loan might be something to look at – that is if you can get a low rate.
How Can Refinancing Car Loans Help You?
By refinancing over a lengthier period of time you will be able to lower your monthly payments. If you’re feeling a bit of a money crunch then why not investigate a number of auto loan companies on the Internet and see what they have to offer? Do it and you could end up with a lot more money in your pocket.
By: Shaun Alexis