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I see that various lenders charge different points. What are points and why do they differ from loan to loan?

April 26, 2017charge differ different lenders loan Points various

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I see that various lenders charge different points. What are points and why do they differ from loan to loan?

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Points are costs a mortgage company charges a borrower to obtain the loan. Each point is equal to one percentage point of the principal amount of the loan. For example, one point on a $200,000 mortgage would equal $2,000.00. The number of points charged for a mortgage depends on the circumstances. Sometimes it is advantageous to pay higher points and get a lower interest rate so as to end up paying less over the life of your loan. Points are paid at the time of closing and can be deducted as interest on your income tax return. Be sure to talk to your tax professional!