FHA Streamline Refinancing and Mortgage Points
If you want to refinance your home with the FHA Streamline Refinance program, can you purchase mortgage points in order to reduce your interest rate? The answer is yes. Many FHA Streamline Refinance borrowers decide to reduce their interest rates with mortgage points. Typically, one point will cost one percent of the amount of the loan, and will usually reduce the borrower’s interest rate by 0.25%.
When is it a Good Idea to Buy Mortgage Points?
In general, if you have a decent amount of cash on hand and you plan to keep your loan for a long time, it could be a good idea to purchase one or more mortgage points to reduce your rate. In contrast, if you have a limited amount of cash and you think you might sell your home or refinance it again in a few years, then mortgage points could be a waste of your hard-earned funds.