Is it better to pay down a mortgage with 6.25% and .375 points. Or to pay 6.375% and 0 points, but put extra $100 a month on the principal?Should I pay points on my mortgage or use the money to pay down the principal?
You can work out the math with an amortization schedule to see the difference in dollars and cents. It all boils down to personal goals and preferences.
It looks like you would prefer to pay down the mortgage ahead of time. If that is the case and you intend to pay an extra $100 per month on principle then the 6.375% is probably the best choice. I have always preferred paying a little more interest since I usually prepay the mortgage and save a lot of money that way.Should I pay points on my mortgage or use the money to pay down the principal?
Well it depends on the loan amount and how long you plan on keeping the mortgage for. The difference of 1/8 a percentage point probably won't affect your payment by 100$
Basically take the difference in payments and divide the cost of the points by that...if you plan on staying in the home longer than that number of months then go ahead and pay the points.
(Payment without points-Payment with points)/cost of the points=the number of months you'll need to be on the mortgage before you break even on interest savings.
put the extra 100 on the principle! your not getting that much aof a better rate. by paying down a little over 1/4% your not getting much be happy with the 6.375
Depends on how long you plant to keep the house.
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