Discover how NACA's interest rate buy-down feature can save you thousands of dollars over the life of your mortgage. Calculate the upfront cost and long-term savings of reducing your interest rate with mortgage points.
Mortgage points, also known as discount points, are fees you pay upfront to reduce your mortgage interest rate. Each point typically costs 1% of your total loan amount and reduces your interest rate by approximately 0.25%. For example, on a $200,000 loan, one point would cost $2,000 and might reduce your rate from 6.5% to 6.25%.
The key benefit of buying points is the long-term savings on interest payments. While you pay more upfront, your monthly mortgage payment will be lower for the entire life of the loan. This can result in significant savings over 30 years, especially if you plan to stay in the home for many years.
NACA's interest rate buy-down feature is one of the program's most powerful benefits. Unlike conventional mortgages where you might only be able to buy down your rate by a small amount, NACA allows for more significant rate reductions. This means you can potentially achieve interest rates well below market rates, sometimes even approaching 0% in certain circumstances.
Consider a $250,000 NACA mortgage at 6.5% interest. If you have $15,000 available for a buy-down, you might be able to reduce your rate to 5.0%. This could save you approximately $200 per month and over $50,000 in total interest over the life of the loan - far exceeding your initial $15,000 investment.
The buy-down is permanent, meaning your reduced rate applies for the entire 30-year term of your loan. This differs from temporary buy-downs offered by some conventional lenders, where the reduced rate only applies for the first few years.