Question:

How should I pay my closing cost interest wise?

Answer:

Closing costs are a significant part of the big home loan picture where you are fighting for best interest rates. In case you are short of cash you may like to roll closing cost into the loan, if it is allowed for the particular loan program and lender.

Also, with your closing cost you may like to buy points off your interest rate – the so called discount points. They are optional to buy and have to be distinguished from regular closing cost items, such as loan origination fee, state taxes, property taxes, PMI, etc. Paying interest points upfront strips the interest rate in your favor and reduces your monthly payments.

For example, a 0.5% difference in the interest rate for a 30-year $220,000 loan may total in $25,000 difference in accrued interest. Also, buying this half point for that loan will reduce your monthly premiums with around $60. That is, if you can afford to spend several hundred to buy that half point now, you’ll benefit in the long run.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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