How Do Mortgage Points Work?
Video Transcript How Do Mortgage Points Work? Hi how do mortgage points work? That is related to the loan amount. Hello my name is Adriel Torres and I’m the owner of ultimate credit today dot com. Mortgage points are charges up front for a loan that the lender charges the borrower to reduce the rate. So assume that you are getting an eight percent rate but the lender gives you the option of getting a seven and a half percent, well they are going to charge you what is called a point. Usually one percent of the loan amount to bring down your rate and thus decreasing your mortgage payment which again is based on the rate of the loan. Now sometimes mortgage brokers as well will charge their own points. And that is one or two points depending on what they are charging is based on their commission fee, could be a mortgage broker point or just points so there are lender points and there are mortgage broker points. Ok. So you can have two sets, make sure you look at your closing statements to
