What are points?
“Points” are what the borrower pays the lender. The lender charges a point that precisely represents the percentage of the mortgage amount due from the borrower. For example, 1 point equals one percent. (A $100,000 loan with 1 point means the lender gets $1,000.) Typically this charge is due at settlement.
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. How it works is that if you pay points, you buy down the rate. Points could be disclosed as discount points. Whatever the name, they are itemized on your Good Faith Estimate and are typically paid at closing.
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. How it works is that if you pay points, you buy down the rate. Points are also disclosed as discount points. Whatever the name, they are itemized on your Good Faith Estimate and are typically paid at closing.
One point is equal to one percent of the loan amount and is paid for at the time of your closing (for example, on a $100,000 loan, 1 point = $1,000). In some cases, paying a discount point results in a lower interest rate on your mortgage. Points may also be tax-deductible (consult your tax advisor). Our experienced Mortgage Bankers can show you how paying points may or may not be beneficial to you.
