i do not want to bring cash to the table at closing and would like to add negative points to mortgage rate to cover closing costs. please explain how this works and how it is calculated into monthly payment information


Hi Gill S,

I talked to a mortgage specialist here at USAA and here is what he had to say regarding your question:


Since rates change daily, you’ll need to review all the available rate options with your mortgage specialist. Negative points, also referred to as premium pricing, do not affect your monthly payment and only impact your closing costs. The associated rate affects your payment and your specialist can show you the impact of these points in order for you to determine which rate will accomplish your goal. One of the most critical aspects of determining the correct amount needed to avoid bringing money to the closing is the accuracy of the estimated closing costs. Prorated taxes need to be considered. Depending on your state and county, the seller may have to give you money for taxes you’ll be responsible for at some future date for the period of the year they owned the propertuyy. This will reduce the cash needed to close. The reverse can be true as well. If the county requires prepayment of taxes, you could owe the seller money based on the period of the year you will own the home for which they have prepaid taxes. Your Realtor can help you obtain accurate figures.


I hope this helps! Thanks for posting!