Does it make sense to buy down my interest rate?

Описание: This video focuses on the math involved for a permanent buydown. Permanent means just that. You are spending some predetermined amount of money upfront, in order to save a monthly amount over the life of the loan. In this example we use a loan amount of $500,000. If the current (no points) rate is 6.75%, the monthly principal and interest payment is $3,243. The cost to buy down the rate will vary a little bit, but for the most part, you can anticipate a 3 to 5 year period before you break even on your bet. I don't refer to discount points as an investment. I refer to them as a bet, no different than any bet you would place at a casino.
In this example, it will cost $5,000 to buy down the rate from 6.75% to 6.375%. That will lower the payment by $123/month. The math is simple. 5,000 divided by 123 = 40.65 months. This is the time period required for you to break even on your bet. Once you know this, then you have to consider 2 very important questions.
1. Do you know for sure that you will live in the home for 41 months or longer? If not, and you sell the home, the bank will make a greater return on their money because guess what? You won't be getting back any of your $5,000 bet that you wagered at closing
2. Do you think interest rates will drop enough over the next 3 years in order for you to refinance? If the rates 2 years from now got down to 5.5%, it would make mathematical sense for you to refinance, but again, the bank got paid off early on your $5,000 wager and they make a greater return on the loan you closed 2 years ago.

In summary - rates right now are slightly above the average for the past 20 years. With that in mind, I believe there is a good chance rates will drop into the 5's within the next 2 years. If you also believe that, then keep the extra $5,000 in your pocket and stay in the home long enough to take advantage of a refinance before your break even point.