that third point on the cost of the home and cost basis was one I had
not thought of- THANK YOU

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Buying points is never a cut and dry decision. You have to make
difficult assumptions, and varying the assumptions a little can make a
big difference in the final figures. I would come up with a few
scenarios, plug them into a calculator, and also consider how likely
each of the scenarios will occur. Go with whatever the ideal points you
come up with is. Don't just put all $5000 blindly towards points. If
there is leftover money, then spend on one of the other two...

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It depends on the fine print. Do you select your decisions before
closing or after? Will the closing really cost at least $5000? What if
it's under $5000, do you lose the money? They probably wouldn't cover
prepaid interest, right? Is the closing with an independent lender? Or
would they artificially raise the closing costs to bump it up to $5000?

- quote -

This is pretty much cash in your pocket, so not bad of a choice. Do you
know if the sale will actually be recorded at $5000 less? It could make
a difference on cost basis for future capital gains, or when you sell
the home, people use the lower price as a reference to negotiate.

this was a good article. Because we are doing an 80-15-5, my thought
is reducing the price closer to 80-10-10 might be better for long term
financial stability. We don't plan on moving again, so points would
make sense from a "long term" perspective. But there are no
"guarantees" we are going to be in house, we have a plan, but the
difference between plan and reality is what we all call "life".

jIM wrote:
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This article may help you answer your question.
http://homebuying.about.com/cs/mortg...unt_points.htm.
You still have to do some work but they have the calculators there.

Anoop

jIM wrote:
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So your question is really, "should I buy points?" Right? This really
has nothing to do with the builder's money it seems. I have never been
a fan of buying points especially in a low interest rate environment.
How much interest will each point save you?

-Will

I don't consider them "the same" at all. buying points will probably
save me thousands in the the long run, but reducing the price of the
house I don't think would save as much in the long run (how to
calculate this, I am not sure).

paying closing or reducing the cost are close to "equal", but buying
points appears to be a good deal if we do not plan to refinance.

jIM wrote:
- quote -

In the end, all the choices are the same aren't they? Unless maybe you
wouldn't pay points unless the money to do so came from the $5000 from
the builder?

-Will

My wife and I are about to buy our second house. The builder gives us
$5000 of "money".

Choices-

reduce price of house $5000
buy points
pay closing

any combination of above.

in the long run, I think buying points makes sense. Any reason we
should consider the other two options?