Paying Fannie Mae and Mortgage Loan Pts

Financing, Hard Money Lenders, Private Money
1

Acquiring a mortgage for an investment property will cost you Fannie Mae points. On an 80% loan, it ranges from 1.75-2pts, aproximately $2500 for 2 pts, depending on who you talk to. In addition, you can buy down the rate, .25, for 1 pt.

Is it better to pay the points or have the seller pay the points? The cost of the points will be included in the offer. So, either way I’m paying for them but I was wondering if there are tax benefits for one as compared to the other.

My understanding is that if you pay the points, they are spread out over the life of the loan. It doesn’t look like you can accelerate them in your taxes.

If you include the cost of the points in your mortgage so the seller pays them, you’re still paying over the life of the loan and some interest too, which is deductible but not much.

Thanks

2

you need to determine when your break even point is. If the cost is 2500 but it saves you 50 month then you will need to keep the mortgage for 50 months to break even. Also, if the seller will pay the points for you then most certainly let them do it.

3

Correct, points cannot be dedcuted in a years time. They are amortized over the life of the loan. So $2500 pts could be deducted at $125/yr on a 20 yr. note. But if you sell early you can accelerate the amortization.