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UNIVERSITY PARK, Pa. — The average homebuyer usually purchases an excessive amount of points when selecting a mortgage, which leads to a higher payment than if they would have opted for zero points and a higher interest rate, according to research by Abdullah Yavas, Elliott professor of business administration at Penn State’s Smeal College of Business, and Yan Chang, senior economist at Freddie Mac.

Yavas and Chang found that homebuyers that purchased points, on average, tended to pay off their mortgages approximately 37.5 months too early. As a result, the average mortgager with points ended up defaulting, moving, or refinancing more than three years before reaching the break-even point from the purchase of the points.

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