Buying points down?

[Kyle Rice]

Hi BP community. I am in the process of making my first deal and I need to decide whether to buy points down for a lower rate or put less down and go with a higher rate. I was thinking I would calculate my COC return for each scenario. Am I on the right track? How do you guys decide and analyze this when buying?

[Bill Gulley]

You'll need to crunch the numbers from the aspect of the ARP over the expected term of holding the property. Look at the alternative of the points paid and the value over that term. Usually, unless you are sure the property will be held for more than 10 or 12 years, it won't be worth it financially. Unless a buy down is needed to qualify, I usually suggest not doing it. :)