Points on a Loan? Yay or Nay

[Allyson Edwards]

Hi Everyone, Newbie here...

I've always been told "Never pay points on your loan!"

But is there ever a time where it would make sense to pay a point or 2 on a loan as an investor? Is this the market to possibly be paying a point to get a lower rate on investments since rates are going up? Not thinking flips just Buy and Hold.

Thank you for the kind words of wisdom :-)

[Chris Mason]

Originally posted by @Allyson Edwards:

Hi Everyone, Newbie here...

I've always been told "Never pay points on your loan!"

But is there ever a time where it would make sense to pay a point or 2 on a loan as an investor? Is this the market to possibly be paying a point to get a lower rate on investments since rates are going up? Not thinking flips just Buy and Hold.

Thank you for the kind words of wisdom :-)

 "Always" and "never" are both dangerous words in real estate. 

Decide after you have the property under contract how long you anticipate you will own it. If the break-even is 3 years and you're going to own it for 10+ years, it can definitely make sense. 

It's very property specific. Let's say $4000 in points will save you $100/mo. Other than the mortgage, is there something you could upgrade about the property for $4k that'll yield $100/mo in cashflow? Property specific question.