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What is the typical benefit of obtaining a mortgage with lower points?

Higher monthly payments

Lower upfront costs at closing

Choosing a mortgage with lower points typically results in lower upfront costs at closing. Points are fees paid to the lender at the closing of a mortgage, with one point equivalent to 1% of the loan amount. When borrowers opt for a mortgage that has lower points, they are reducing the amount of money they need to pay at the time of closing. This can be particularly advantageous for buyers who may not have substantial savings or who want to minimize their initial cash outlay.

In addition, while lower points can often correlate with slightly higher interest rates over the life of the loan, the immediate benefit at closing is focused on reducing upfront costs rather than increasing monthly expenses or extending loan terms. Therefore, this choice clearly aligns with the key advantage of opting for a mortgage with lower points.

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Higher interest rates

Longer loan terms

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