Paying Points: A Secret to Save Money 💰
Summary
In this video, I reveal a secret strategy to save money when taking out a loan. By paying points upfront, you can significantly reduce your monthly payments and recoup your investment in just 33 months. I explain how paying points can lead to a great return on investment (ROI) and how it is tax deductible. If you’re planning to stay in the loan long-term, paying points can be a winning strategy. Watch the video to learn more and discover if paying points is the right choice for you.
Transcript
0:00 Here’s another secret for you guys. If you have the money, pay points. Points are your friend. Here’s why. And this is just an example, but it usually pencils out just to an ROI of something like this.
0:12 It’s a loan amounts $500 and you pay 1%. Your payments would drop about $150 a month. That point is tax deductible.
0:22 Okay, so that $5,000 that you’re spending, you can write that off on your taxes. Your payments would be about $150 lower.
0:30 So you recoup everything in 33 months. That’s a really good ROI, right? If you’re in the loan long-term, more than 33 months, every month after that you’re winning, okay?
0:40 Uh, the, the only way you’re gonna lose here is if you sell the house, or you refinance the house before the 33 months.
0:48 But if you’re refinancing the house, is it really a total loss? No, because you’re probably refinancing the house to take a lower.
0:53 Interest rate, so that would be like holding a $20 bill and then dropping it to pick up $100 bill, you know, so you’re not really, it’s not a total loss versus if you sold the house, that money is gone
1:04 If you’re in the loan, short term, if you don’t plan on being there. Uh, long time that I recommend taking an even higher interest rate to cut down on cost.
1:13 So again, if you, if you have the money, um, and you can, you know, and you’re going to be in it long term, I highly recommend.
1:20 Paying a point or even two.
