DIYbanter - View Single Post - Use credit card check for house down payment

(D. Gerasimatos) writes:
In article , Una wrote:

If you are going to prepay, then prepay the principal, not
the interest. Which means: do not buy points! Get a smaller
mortgage or make prepayments as you go along. An advantage
to prepayments is that if your cash flow gets tight, you can
suspend making them.

I disagree with this advice. Buying down the rate can save thousands
over the life of the loan.

But, does anyone really know the life of their loan?

A pay down in principal lowers interest and reduces how much you owe,
and directly increases your equity in the house.

A buy down of an interest rate only saves you money IF you stay in the
house and keep that loan for a relatively long time horizon.
Statistically, very few people stay in teh same place long enough to
make a 2 point paydown worth it, and even if they do, they'll
typically find themselves refinancing for one reason or another at
least once during their stay in that residence.

Best Regards,
--
Todd H.
http://www.toddh.net/