My neighbor's refi story changed how I look at points

I was talking to my neighbor Dave last weekend while we were both out watering our lawns. He told me he just refinanced his house and paid 2 points upfront to get a 5.75% rate instead of taking the no-cost option at 6.5%. At first I thought he was crazy for dropping that kind of cash at closing. But then he broke it down for me over about 20 minutes on his driveway. He showed me on a napkin how the breakeven was only 18 months and he plans to stay in the house for at least 8 years. That math hit different because I always just went with the lowest upfront cost option without really running the numbers myself. Has anyone else found that paying points actually worked out better in the long run?

3 comments

3 Comments

shanes668d ago

Man that napkin math really hits different when you see it actually laid out like that.

danielowens4d ago

Close jennybailey but I think those Q3 numbers were actually from Q2.

jennybailey8d ago

@shanes66 Yeah once you see the numbers in black and white like that it's hard to unsee... really puts the whole thing into perspective.