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Refinance an Adjustable Rate Mortgage - Should Home Owners Pay Points When You Refinance Your ARM Mortgage

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By : Darin Sewell    99 or more times read
Getting the best deal when you refinance an adjustable mortgage is critical to many borrowers to ensure they receive the lowest payments and interest rates.

While the best deal might be different amongst individuals everyone can agree that receiving the lowest interest rates is the most important part when you refinance an ARM mortgage.

A lot of home owners use the easiest method of getting the lowest interest rates, they buy the rate down using points.

Points are a decrease in the loan rate that will happen after the borrower pays a certain percentage of the loan amount.

You will need to figure out how much you will save each month with the reduced loan rate.

Then take that amount and multiply it by the total number of months that your ARM loan is fixed for.

Lots of borrowers who currently hold an adjustable mortgage and maybe thinking about another will want to make certain that the choices they make do not end up costing them money in the long run.

If the numbers show you will save more then it costs to pay the points on the loan you may want to consider it. But there is one more component you must take into consideration.

Because the lender is giving you a reduced interest rate the mortgage company will not be receiving any rebates from the wholesale lender and must earn their money from loan origination fees. These fee's should average about one percent of the loan amount.

Not entering in any of the origination fee's into your calculations may end up making you lose a lot more then you save.

To make sure that you are able to figure your savings precisely make sure to ask for a Good Faith Estimate that will break down all the points and fee's you will be paying for the smaller rate.

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