Should Points Be Paid for a Lower Home Mortgage Interest Rate?

  • October 21, 1987
  • • Written by: Marvin L. Bouillon C. David Newbery Kanalis A. Ockree

Fall/Winter 1987, Vol 12, No 2

Abstract: The article examines whether discount points should be paid to acquire a better interest rate on a new home mortgage or a refinanced home mortgage. Two present value models are developed and illustrate how tax consequences may influence the buy down decision on a home mortgage being refinanced but have no bearing on the same option with a new home loan.