Question:

What is the advantage of a no points mortgage?

Answer:

Should I buy points or should I get a no points mortgage? - this is a common question among borrowers.

If you are low on cash, it is easier to get qualified for a no points mortgage, especially if you are not planning to stay in the house for long.

The Greatest Advantage of the No Points Mortgage

Often, first time homebuyers have enough funds for the monthly payment, but have difficulty coming up with funds for down payment, closing costs and discount points. Especially if they don't expect to stay in that home for more than several years and they are refinancing, a no points mortgage is the best way to go.

Going with a no points mortgage frees cash, if you are short on it. If you are refinancing, a no points mortgage can be better than paying points that will not be deducted in the same year the transaction was closed but over the years of the loan.

Basically, a no points mortgage is a winner if you are planning to stay in your home for 3 to 5 years; planning to stay for more would require more calculations but most certainly the no points mortgage advantage will be lost over time.

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