Many future homebuyers are curious about mortgage points, which allow borrowers to pay a fee to reduce their interest rate and lower monthly payments. One point typically costs about 1% of the mortgage and can reduce the rate by approximately 0.25%. The savings depend on how long you stay in the home, with a break-even point indicating when savings equal the cost of the points. Mortgage points can be used with both fixed-rate and adjustable-rate mortgages, but their benefits vary based on the loan type and market conditions.
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