Buy points for refi ??? What am I missing here ???

[Aaron Hunt]

Guys

What am I overlooking in my calculations ??? Please help.

Question on wether I should buy points to lower my refinance rate OR not.

O/S Loan of $502705

I have two options:

Option 1 - Refi Rate: 2.375 (No points, all closing costs paid by lender)

The loan will be for $502705

Option 2 - Refi Rate: 2.125 (Points Cost $5676 + all closing costs to be paid by me)

I plan to roll in all the costs into the loan, the loan will be for $502705 + $5676 + $3000 = $511381

According to my math

For option 1 - Monthly payment is $1,953

For option 2 - Monthly payment is $1,922

And

over 10 years I pay lower interest by $9927

And if I end up keeping the property for 30 yrs

I end up paying lower interest by $20,011

There is no outflow from my pocket, Why would I not buy down the rate and pay for the points and save?

[Jesse Rivera]

Wow, I don't know how this lender is making money. The margin is tiny!!

I would run with the 2.375%. The difference in payment is only $31 and it would take over 23 years to break even (the difference pay off the added cost to the loan). 

And I concur, stay away from Quicken.