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.
Make savings a priority in your life. Even if your budget is small, tweak your finances so that you save greater than 10% of your total earnings. 1  Think of it like this: If you manage to save $10,000 per year â which is less than $1,000 per month â in 15 years, you'll have $150,000 plus interest.2  Start saving young. Setting a budget will open your eyes to how much money you spend, if they haven't been opened already. 2  Many people, after setting a budget, realize that they spend money on pretty petty things. 3  This knowledge allows them to adjust their spending habits and put the money towards more meaningful areas.