Buying points involves paying more money up front to reduce interest rates. Given that someone struggling financially wouldn’t be able to do that I don’t think it’s fair to include them in conversations about the affordability of homes. It’s also not a great idea to buy points if you’re uncertain about whether you’re going to continue living there. It can take years for the savings on interest to recoup the up front cost of points, so you could easily lose money if something happens and you end up having to move or sell the home.
Edit: also the numbers the above commenter used are not far off, in the US average interest rates in 2021 went as low as 2.65%, and average interest rates in 2024 have been oscillating around 7%.
Home owners buy points all the time. I’m not talking about the rich either, this is done at middle class incomes. And as low isn’t a real metric. That 2.65 was going out to folks borrowing less with excellent rates. The average person taking out a 750k loan was absolutely not getting that rate. It would have been closer to 3.5%. You seem to be mixing average with the absolute lowest rate.
I’m not mixing average with lowest rate, the average dipped that low in 2021, meaning lots of people were getting even lower rates than that. And yes, of course people with middle class incomes buy points. That doesn’t counter my point.
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Sure, if you use made up rates and exclude point buy downs.
Buying points involves paying more money up front to reduce interest rates. Given that someone struggling financially wouldn’t be able to do that I don’t think it’s fair to include them in conversations about the affordability of homes. It’s also not a great idea to buy points if you’re uncertain about whether you’re going to continue living there. It can take years for the savings on interest to recoup the up front cost of points, so you could easily lose money if something happens and you end up having to move or sell the home.
The “boots” theory of economic unfairness is pretty relevant here.
Edit: also the numbers the above commenter used are not far off, in the US average interest rates in 2021 went as low as 2.65%, and average interest rates in 2024 have been oscillating around 7%.
Home owners buy points all the time. I’m not talking about the rich either, this is done at middle class incomes. And as low isn’t a real metric. That 2.65 was going out to folks borrowing less with excellent rates. The average person taking out a 750k loan was absolutely not getting that rate. It would have been closer to 3.5%. You seem to be mixing average with the absolute lowest rate.
Yes the price went up. It wasn’t double.
I’m not mixing average with lowest rate, the average dipped that low in 2021, meaning lots of people were getting even lower rates than that. And yes, of course people with middle class incomes buy points. That doesn’t counter my point.