Score a point for smart buyers

Regarding “With Rates Rising, Loan Points Poised to Rebound” (Dec. 4): The fact is that smart buyers and refinancers have been paying points all along. It’s just that the proliferation of no-cost loans during the 1990s and early 2000s made it appear that they were gone. The blunt fact is that no-cost loans were almost never good for borrowers; they were good for lenders who could disguise their income and make egregious commissions.

Buyers who pay points don’t save just one-eighth to one-quarter of a percent. That sounds like a piddling amount, but the dollar savings are huge. One point really produces a rate reduction of from one-quarter to three-eighths of a percent, depending on the program. If a buyer were to pay $3,000 in points, his annual interest would be reduced by $750 to $1,000. Compare that with the $100 in interest that that money might earn in a savings account.

RANDY JOHNSON

Newport Beach

The writer is the author of “The Savvy Borrower.”