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This feels crazy to me, but the math seems to be telling me to use "negative points" on my mortgage and go for a higher interest rate. I'm using this calculator to figure out when the amount of points paid at closing will pay off due to the reduction in interest rate. Interest rates are pretty low now, and the difference between very small numbers is.....very small, even smaller after the mortgage interest tax deduction clips them down another 39%. The calculator generally says that it will take 10 years for the points to be paid back in reduced interest payments. But, I doubt we'll stay in this house for more than 10 years, maybe less than 7 (yes, I've done the math on renting, it doesn't work in this town, bummer). So, suddenly I'm considering getting cash back from my lender and paying a higher interest rate, because I can do more with that cash in my retirement fund or fixing up the house than I can save from tiny changes in the mortgage interest rate.
Does this make sense? Would anyone else do this?
This is for a primary residence, second time we're buying a house, already sold the first at a profit. We have plenty of cash on hand for down payment etc, we do not *need* more cash at closing or anything. We have no other debt, at all. Saving 60% of net income already.
Does this make sense? Would anyone else do this?
This is for a primary residence, second time we're buying a house, already sold the first at a profit. We have plenty of cash on hand for down payment etc, we do not *need* more cash at closing or anything. We have no other debt, at all. Saving 60% of net income already.
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