Pay me now or pay me later! In essence paying points is a trade off between paying money now versus paying money later. Discount points are paid to buy down your interest rate. For example, a one-point loan will always have a lower interest rate than a no point loan. Each point equals 1% of the total loan amount. Therefore, two points on a $100,000 mortgage would cost $2000. The number of points paid is between you and your lender.

When you check the mortgage offerings of various lenders, you will get two important numbers--the interest rate for the mortgage and the points that the lender will charge to make the loan. Paying points up front is a good idea if you plan on keeping the loan for at least four years so that you recover the costs through lower monthly payments. Also, points are tax deductible. However, if you think you might move within four years or might want to refinance because the market is declining, then you probably would be better off with a no point loan. Points cannot be financed into your payment and must be paid in cash at the close of escrow.

Each homebuyer has a unique set of circumstances and requirements. Look at what your monthly payments would be at different interest rates. Your banker can answer your questions and find a loan that is perfect for you.

For a free consultation to discuss which type of mortgage loan will work best for you, call Victoria Spannaus at Wachovia Mortgage Corp. at

(800) 741-7813 or 910-692-6225.