[quote=AN]200k loan @ 4.75% for 30 years = $1043/month payment
200k loan @ 4.25$ for 30 years = $983/month payment

Over 30 years, it’ll cost you $21,600 more to go w/ the 4.75%.[/quote]

Dumb question…Assuming the buy down cost from 4.75% to 4.25% is $10k, doesn’t this depend on (a) where you’re going to get the $10k from and (b) inflation?

I’m thinking of two simple cases…

Case 1: the $10k is coming out of one’s pocket. In this scenario, the question seems like which is worth more…
*$10k in present dollars + accrued interest on that $10k over 30 years
OR
*$21.6k spread out over 30 years, factoring in inflation.

Case 2: I guess in theory you could choose not pay the $10k out of pocket, but instead roll that into your loan (…Loan Officers/Brokers, correct me if I’m wrong if you can/or cant do this…) In this scenario, would the comparison be more accurate comparing

*200k loan at 4.75%
versus
*210k loan at 4.25%

If so, $210k at 4.25% for 30 years is $1033/month or $10 less each month. So effectively, the difference would be $3600 difference over 30 years.
(assuming you could quality to borrow $210k). I suppose there are other ways to finance this $10k too, I won’t go there though.

Then the question is whether you are planning to stay there for 30 years to save that difference.

Disclaimer: I admit, my math and logic is often rusty at times. I’m sure I’m forgetting other variables that tilt things in favor buying down the rate. My post is a more of a question as how one does this comparison than proposing an answer….