Question about rate buydown
I'm under contract on a $305,000 home and currently have a loan structure that includes paying roughly $10,000 in points to buy the interest rate down from around 6.4% to 5.875%.
The current setup would leave me with about $19,000 in savings after closing and a mortgage payment around $1,850/month.
I'm considering reducing or eliminating some of the rate buydown and instead keeping more cash on hand after closing (possibly $23k–30k in savings), even if it raises my payment somewhat.
For those who have been through this, would you rather:
Pay ~$10k upfront to buy the rate down and have a lower monthly payment, or
Keep the cash in the bank and accept a slightly higher payment?
I plan to stay in the home at least 5 years, possibly longer. I'm trying to figure out whether the extra liquidity is more valuable than the lower payment and what the break-even point really looks like in practice.
How do you guys and gals feel about this?