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Interest Rates play one of the largest parts in what home you can afford. A rule of thumb is for every 1% increase to your home mortgage rate, the amount you can afford to buy decreases by about 10%. 

Should You Pay Points to Get a Better Rate?

Like most things, this topic is not black and white, but rather depends on the individual situation. Each person has a unique scenario as well as goals for their home ownership journey. 

The number one thing to consider is how long you will keep the loan and what is the break-even time frame. 

A person buying in an housing environment where they expect the future rates to decline will be less likely to pay points for a lower rate they may be able to get for free (through a refinance) in the near future. 

If someone suspects that the rates today are at their best they’ll be for a while, then it may make sense to spend more today since you’ll likely keep the loan and home longer than the period it takes to break-even and recoup the upfront funds for the point in lower monthly payments.

As always, the easiest plan is to talk to a pro. Spire would love to help and we have people ready to talk to you now! Call us today!

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