High interest rates have homebuyers looking for ways to save with some turning to buying mortgage points, according to Zillow
A new report found that nearly half (45%) of borrowers purchased mortgage points last year to help reduce their monthly payments. There were far fewer buyers purchasing points in past years — 29.6% in 2021, 28.4% in 2020 and 27.3% in 2019 — due to historically low interest rates.
Mortgage points allow buyers to pay an upfront fee to buy down the interest rate on their loan, essentially pre-paying interest upfront to get a lower rate and lower monthly payment.
Zlllow says while buying points is more common now, it’s most used by buyers making less than their area’s median income who are concerned about monthly payments.
“Buying points can be a great option to improve monthly affordability — there are many different mortgage products, including buying points and the 2/1 buydown buyers can explore,” said Erika Kerry, a loan officer at Zillow Home Loans. “These options are good examples of why it is so important to work with a knowledgeable loan officer. The loan officer should be a partner in the buying process, helping explain options so buyers can make an educated decision.”