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What are points?

April 26, 2017Points

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What are points?

74 Answers

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Points are loan fees that are paid to lenders and mortgage brokers. One point equals 1% of the loan amount. There are two different types of points: origination points and discount points. Origination points are charged by a mortgage company as a fee to process and approve your loan, while discount points are used to buy down the rate of interest. Discount points are typically passed through to the investor to secure that lower interest rate.

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Points are a one-time charge by the lender, which allow you to obtain a lower interest rate. One point is equal to one percent of the mortgage amount. FMFCU offers a zero point option on its fixed-rate mortgage products.

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A point is equal to 1% of the principal amount of a mortgage loan. Discount points are a one-time charge assessed at closing by the lender to increase the yield on the mortgage loan. For instance, one percent of a $100,000 loan is equal to $1,000.

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Also called discount points, a point is 1% of the amount of the loan. Points are a one-time fee added to your closing costs and generally results in a slightly lower interest rate on your loan.

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Points are simply the option to reduce your interest rate by paying a fee. This is like prepaying part of your interest, so that interest payments are reduced over the period of the loan. Each point is equal to 1% of the loan amount.

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