When to buy down your interest rate?

[Thomas O'Donnell]

What's up my fellow peeps! I will be buying my first investment property soon via house-hacking and I'm wondering if I should buy points or not. When do you know if you should buy down your interest rate or not? What factors should you look at when determining if this is the move?

[Andrew Garcia]

Hi @Thomas O'Donnell, look at the breakeven point for buying down points.

If it takes you 7 years to breakeven and you plan on selling this in 5 years, then it is not worth it.

If you plan on keeping this loan for 30 years, buying down points is almost always a good idea.

The breakeven point is the main determining factor when buying down points.

Hope this helps! Let me know if I can be of any assistance.