not everything is eligible: home repairs, general closing charges, homeowners' association dues, and property hazard insurance premiums. Getting a loan to purchase a home can be tricky, and there are terms one might find hard to understand—e.g., the term "mortgage points" might leave you feeling lost. Picture this: mortgage points are essentially the interest you prepay. It's possible to lower your mortgage loan's interest rate by "buying points." Mortgage or discount points are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is called "buying down the rate" and will decrease your monthly mortgage payments and could save you from drowning in monthly payments. One point costs 1% of your mortgage amount (or $1,000 for every $100,000). You pay some interest upfront in exchange for a lower interest rate over the life of your loan. In general, the longer you plan to own the home, the more points help you save on interest over the life of the loan. This strategy can lead to significant savings, making it a smart financial move for many home buyers. For example, Bank of America's Better Money Habits uses a chart to illustrate points for a $200,000 loan. You can buy the points to ensure low interest rates when you get the loan. This can help you save money, especially if you plan to stay in the house for an extended period. However, the amount of cash you'll save by buying the points depends on the number of points you buy. For instance, if your mortgage is $200,000 and you buy two points, you will owe $4,000 when closing.
Further related to taxes and property ownership is that once you
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