Points determine additional cost or credit in your closing costs for obtaining a desired rate. Simply put, lower rate, higher closing cost. Higher rate, lower closing cost. When you hear someone talk about "buying down the rate", this is what they're talking about. "Par rate" is the rate that neither adds nor gives credit to your closing costs. So for example (this is not a quote), if the par rate is 5%, you may be able to lower that to 4.5% by adding to your closing costs. This up front cost can help you save money over time if you keep your loan. If you plan to only keep your house/loan for a few years, you can get a credit in your closing costs by taking a higher rate. I can tell you which is more beneficial and by how much by knowing your plans and doing some quick calculations. PM me if you have questions. Thanks,
PMan
