Discount Points (for a Mortgage)

[@anacelisbercruz1246]

this is what i needed to see written on a board...thank you.

[@Edspira]

No problem!

[@HenrikKarapetyan]

Super clear! Why did I have to watch 5 videos to finally get to this??! Wasted half hour and here’s a guy explaining it simple, with numbers and without asking me to subscribe (I did) every 10 seconds. I wish the 5 other videos showed 10% of the sense and efficiency of this video

[@johnathonjones1597]

Thank you for breaking that down to a science. Pure genius.

[@ricco2024]

HOW did you calculate to get the monthly payment amount !?

[@phoebejanelagas202]

M= P[r(1+r)^n/((1+r)^n)-1)] M= Monthly payment P= Principal loan amount R= monthly interest rate (u need to divide the interest rate by 12/months per year) N= number of payments over the loan’s lifetime (also multiple by 12)

[@leahblackburn1933]

You could get a Financial calculator like the HP 10Bii to just skip the algebra. It's pretty magical.

[@piscestraits-rule3738]

Everytime I think I've found the best way to broke down the math aspect of this formula...it just got better than the one before! :))

[@nasermir8510]

Thank you for making it simple.

[@Edspira]

Glad it was helpful!

[@julietgarcia2590]

this was the best breakdown. thank you so much!

[@brendarodriguez4653]

how do you get the monthly payment

[@RafValentin]

Great explanation

[@Guru0020]

Excellent explanation sir thanks

[@Edspira]

So nice of you

[@karissa3099]

This was so easy to follow the way that you explained it. Thank you so much for this.

[@beatsgalura]

would the points you are paying upfront come out of your equity if you are refinancing? Or you have to come out of pocket? and what is the maximum points you could pay to drop your interest rate?

[@Edspira]

The points do not come out of the equity. It is basically prepaying your interest on the loan. Regarding the maximum points, it all depends on the lender and what deal they are willing to give. Good question!

[@babieboi101]

Excellent explanation, thank you!

[@Gomangoman11]

Your not accounting for opportunity cost. The hallmark of a bad investment Is when we start talking about "breakevens" instead of yields. When your being offered points that give you a less than desirable yield (compared to a investment vehicle within your risk tolerance) then you should take negative points. When you're given a desirable yield you should load up on them. It's simple, every dollar you give to gain capital (in this case real estate) needs to offer a preferable yield.

[@JoshuaWeidnerMagician]

You need to account for the time value of money. For example, is the 30 year annuity of $53 per month worth the upfront cost of $3200 given the discount rate? Using 3% (for inflation but throw in whatever number you want to do the math with) and keeping the loan for the full term, the net present value would be about $9371.04. Feel free to double check my math though.

[@S590573]

The NPV of these cash flows (the net difference ) is something like -1000 so it almost never makes sense to buy points

[@WikiTicky]

But... $53 in 5 years won't be worth the same as $53 today.

[@chezzer85]

You'd need to do a time value money calculation by applying a discount rate for inflation. In reality it would be longer than 61 months.

[@nabilnoble1390]

Wow thanks 🙏

[@Edspira]

You’re welcome 😊

[@analoja08]

thank you so much for this video ,I've seen many videos and I always ended up more confused but you save me ! Thank you again .

[@Edspira]

You are very welcome!

[@dongaboo280]

Crystal clear my friend, thanks a lot...

[@renishdel]

I wonder if I pay 2% towards down payment instead of points..how long would it take to break even.

[@matthewt6070]

I would like to know this also

[@AnilSingh-fb2yn]

What about how much money you could have made by putting the $3200 in the market making 8-10% back.

[@the-bu3lb]

how did you get the 53 or the monthly payments

[@melissamejia3497]

how did you figure out the monthly mortgage payments ?

[@Edspira]

I calculated the present value of an ordinary annuity. See the following video for a more detailed explanation: kzbin.info/www/bejne/oqTGYWmViNN9qtU

[@JF098]

N = 30 * 12 months I = 7/12 months PV = 160,000 FV = 0 *PMT = 1064

[@shuoma5303]

I think it's a lot more complicated than just dividing the point diff with the payment diff. You have to consider that due to the interest difference. The principle and interest paid after certain amount of time would be different. It could easily be thousands of dollars apart in either section. And also, mortgage interest is tax deductible. So if it is your primary residence, income level is another factor in this game.

[@LoicaNyamsi]

how are we calculating the payments?

[@dalmatiabnb]

If I have a $40,000 loan and I'm giving 4 points to get to 2.5% on a 30 year fixed... would it be beneficial at all to pay it off early?

[@mariafitts]

If I received a 2.75 % discount rate to start with , why is my lender adding 4,680.78 to reduce my rate to 2.625% ??? Please help, is that correct

[@zaddvang]

Thank you for the math. It does make sense

[@yannalanders7270]

The best explanation! Thank you!

[@yadshankar6439]

Better understood. Thank you

[@deanmohamed7575]

very well explained

[@green08green08green]

Wow, thanks for explaining this. It's perfect!

[@marquariustheentertainer]

how did you come up with 6.5 %

[@MsLat1fah]

Great video. Thank you!

[@kevinleon7772]

Thank you very much., Super clear and helpful for my test.

[@jhonny_wk]

Great video, thank you

[@joeylac84]

Your videos are a great help for me right now. Trying this exam the second time around. Do you have a video for ARMs loan?

[@CC-mp5jc]

PLEASE HELP! When I do the math, it makes perfect sense to pay points, almost too good to be true, where did I go wrong? At 7%, the total interest paid is 223k and at 6.5%, its 204k, Isn't it worth 3k upfront?

[@the-bu3lb]

explain ow your geting these figures

[@rudyjenx7307]

Love this

[@the-bu3lb]

how did you figure the monthly payment

[@watchmesave4912]

Use a mortgage calculator

[@phoebejanelagas202]

M= P[r(1+r)^n/((1+r)^n)-1)] M= Monthly payment P= Principal loan amount R= monthly interest rate (u need to divide the interest rate by 12/months per year) N= number of payments over the loan’s lifetime (also multiple by 12)

[@landwalker88]

I'm I the only one seeing a totally screwed up image? It looks like a tv that's getting really bad reception.

[@johncardelli3503]

Thank you so much!

[@Edspira]

Glad to help!

[@alstroemeriamorada]

You know its going to be well taught when they have the black board and different colored pens

[@deanslegos1990]

Meanwhile yt music videos are getting hundreds of millions of views smh

[@Corndog199]

This helped soooo much, my book makes it so confusing. Thanks so much!!!!