Borrower purchases points for lower rate

Loan officer: Scott Baer, California Mortgage Advisors.

Property type: Single-family residence.

Appraised value: $1.125 million.

Loan type: 20-year fixed-rate.

Loan amount: $483,500.

Rate: 1.99%.

APR: 2.10%.

Backstory: Our client had dreamed of paying off their home loan early for many years. They had a 30-year mortgage and were making additional principal payments when they had extra money available. Even with these additional payments they did not see much reduction in their balance.

They were really hoping to pay off their mortgage and be debt free during their retirement.

I worked with the client to secure a 20-year fixed loan which funded within 21 days of the full application. Their payment was slightly higher than they were paying on the 30-year, but still allowed them to make additional payments to the principal when they could.

“I worked with the client to secure a 20-year fixed loan which funded within 21 days of the full application. Their payment was slightly higher than they were paying on the 30-year, but still allowed them to make additional payments to the principal when they could. After reviewing the options with me, the client chose to pay points and buy the rate down to a very attractive 1.99%. Paying points is not the best option for every client and requires a careful conversation to weigh the costs and benefits. By asking the right questions and learning more about the client’s goals, I secured a substantially lower rate that allowed the client to pay off their mortgage 10 years earlier.”

After reviewing the options with me, the client chose to pay points and buy the rate down to a very attractive 1.99%.

Paying points is not the best option for every client and requires a careful conversation to weigh the costs and benefits.

By asking the right questions and learning more about the client’s goals, I secured a substantially lower rate that allowed the client to pay off their mortgage 10 years earlier. This is a great time to start mortgage planning with a knowledgeable advisor. Rates are rising as the Federal Reserve slows or “tapers” the pace of its bond purchases.