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What are points and how do they work?

Points
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What are points and how do they work?

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A point is equal to 1% of the amount of the mortgage. Points are used in two ways. “Origination points” are used to cover expenses incurred by the lender to fund the loan. “Discount points” are points paid by the borrower to reduce the interest rate on the loan. Ask your Home Loan Consultant for information about our zero point loan options.

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A12: Points are fees paid to the lender at closing. One “point” is equal to 1% of the total loan amount. For instance, for a $200,000 loan, one point would equal $2,000. Most retail lenders or retail banks charge between 1 and 2 points.

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