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.
If you take that money and invest it in the s&p 500 you will average 10% every year. So letâs say at age 30 you decide itâs time to start saving for retirement. So you save 500 dollars a month which is 6k a year. Thatâs not unreasonable considering itâs about 10 of the average persons income.