When it comes to purchasing a home in Des Moines, obtaining a mortgage is often the only option for many homebuyers. But with so many different types of mortgage loans available, it can be overwhelming to decide which one to choose. One aspect of a mortgage that can be particularly confusing for homebuyers is mortgage points. Let's discuss what Des Moines borrowers should know about mortgage points so that you will be better able to make an informed decision about your mortgage loan.

First, it’s important to understand what mortgage points are. Essentially, they are fees that are paid to your lender at closing, in addition to your down payment and other closing costs. The more points you pay, the lower your interest rate will be on your loan. This can ultimately save you thousands over the life of your mortgage. So if you can afford to pay more upfront at closing, it is worth considering paying for a few mortgage points to save money in the long run.

It’s also important to consider your timeframe for staying in your home. If you plan to sell your house or refinance your mortgage in the near future, it may not make sense to pay for mortgage points. This is because it typically takes several years for the savings from lower monthly payments to surpass the upfront cost of paying for mortgage points. However, if you plan to stay in your home for a longer period, paying for mortgage points could save you a good deal of money over time.

Another factor to consider is your overall financial situation. If you currently have a lot of debt or a low credit score, it may not be the right time for you to pay for mortgage points. This is because mortgage points are typically paid upfront; so if you aren’t in a good financial position at the time of closing, they may not make sense for you. However, if you are in good financial standing and have the means to pay for mortgage points when you close on your house, it could be a smart decision in the long run.

Last, it’s important to shop around and compare different mortgage rates and terms before deciding whether or not to pay for mortgage points. Each lender has different rates and terms, so it’s important to see and understand all the options that are available to you. By doing your research and comparing different rates and terms, you can find the best mortgage loan for your specific needs and financial situation.

Knowing what mortgage points are and how they work is essential for any Des Moines borrower who is considering applying for a mortgage loan. It’s important to consider your financial situation and your timeframe for owning your home, and to shop around and compare different rates and terms, before deciding whether or not to pay for mortgage points. By doing so, you can make a better-informed decision about your home purchase and potentially save yourself thousands over the life of your mortgage!