Say i wanted to refinance my house with $200k on principle at a 3% interest rate, closing costs are 10k. i know you can buy points to buy down your rate at 1% of the loan equal to about .25% rate reduction.
But how does it work to reduce closing costs? Is it basically the same thing in reverse, or is there some other formula? In other words, if i took a 3.25 or 3.5% rate, would my closing costs go down to nothing or do i just get lender credits at the same 1% rate? Aka, going from 3% to 3.5% would be 2 points or $4000 towards closing costs.
would appreciate an explanation on this. Thanks!