Each point costs a fee equal to 1 percent of the loan amount and typically reduces your mortgage rate by about one-eighth of a percentage point. So if you're borrowing $250,000 and the standard interest rate is 4.00 percent, you can buy a point for $2,500 and reduce your rate to 3.875 percent.
How much should you save every month? Many sources recommend saving 20 percent of your income every month. According to the popular 50/30/20 rule, you should reserve 50 percent of your budget for essentials like rent and food, 30 percent for discretionary spending, and at least 20 percent for savings. We agree with the recommendation to save 20 percent of your monthly income.
Use our Refinance Calculator to estimate how much you may be able to save each month on your monthly mortgage payment by refinancing. This tool is for educational purposes only and does not constitute a commitment for a loan. The amount of refinancing for which you might qualify will be based on your current income, debt, savings and the appraised value of your home. To find out how much refinancing you qualify for, and to obtain a more accurate estimate of how much you can save by refinancing, call Freedom Mortgage.