Products We Offer:

*Don't qualify for a conventional mortgage? BayCoast Mortgage offers a unique portfolio product that will appeal to borrowers who may have a rare situation that does not meet conventional underwriting guidelines. All loans are subject to credit approval.

 

Regarding Points: Each point costs the borrower 1% of the loan request. Although some borrowers encourage the use of points, we tend to discourage their use in most situations. Each point paid will reduce the interest rate, and hence, the monthly payment on the mortgage note. Often, to justify the payment of points, the borrower will do the following analysis. They will take the cost of the point and divide it by the reduction in payment in order to find out how many months it will take to recover the cost of the point. This attempt to find the "break-even point" or "payback period" is deeply flawed since it does not take into account the time value of money. In simple terms, it means that if you were to keep the money you are proposing to pay in points and invest it at a rate as low as 5%, you will never recover the monies lost with the amount of the reduced mortgage payment. The savings account will grow faster than the sum of the reduced monthly payments. Also, the fact that the average mortgage only lasts about 6 years (and you can compare this to your own experience) means that even if you were to believe in payback periods, which usually range from 5 to 7 years, you are still unlikely to have your mortgage long enough for it to make sense. Financing the points into your mortgage only makes it worse.