What are points?
One point is equal to one percent of your loan amount. For example, one point on a $100,000 loan would be $1,000. Paying points is a way to reduce your interest rate (and monthly payment) when you purchase or refinance your home. In general, it makes sense to pay points if you plan to keep your loan long enough for the savings in your monthly payment to exceed the extra fees you pay up front.
Points are a percentage of the loan amount paid at closing that affect your interest rate. For instance, on a $90,000 loan, 1 point = 1% or $900. If you pay points, you are buying down the rate. Alternatively, in exchange for a higher rate, the lender pays points to offset your closing costs. These are considered negative points. Negative points may be a wise option if you have limited funds to use at closing. Points are also referred to as discount points. Points are itemized on your Good Faith Estimate and are typically paid at closing.
http://images.mortgagequestions.com/img/brand95/utilities/dotclear.gifPoints are a percentage of the loan amount paid at closing that affect your interest rate. For instance, on a $90,000 loan, 1 point = 1% or $900. How it works is that if you pay points, you buy down the rate. Alternatively, in exchange for a higher rate, the lender pays points to offset your closing costs. These are considered negative points. Negative points may be a wise option if you have limited funds to use at closing. Points are also disclosed as discount points. Whatever the name, they are itemized on your Good Faith Estimate and are typically paid at closing.
An amount equal to 1% of the principal amount of a mortgage loan. Discount points are a one-time charge assessed at closing by lender to increase the yield on the mortgage loan to a competitive position with other types of investments. For instance, one percent of a $100,000 loan is equal to $1,000.
