What are the discount points and origination fees?
Your lender may let you purchase discount points to secure a lower interest rate. One point is equivalent to 1 percent of the principal (e.g. three points on a $100,000 mortgage would cost $3,000). The longer you plan to stay in the home, the more it’s worth it to pay for discount points. Origination points are administrative charges that cover the cost of the processing of your application. They don’t affect the interest rate. 4. What are the closing costs? Be aware of the extra fees that will be included in your loan. They may include charges for appraisals and credit reports, and make sure you understand what each one is for. Ask for a “good faith estimate” of your loan’s closing costs-your lender is required by law to give you one within three days of receiving your application. Ask if they’ll guarantee it in writing and if there’s room to negotiate on the extra fees. 5. What are rate locks and when can I take advantage of them? Rate locks or lock-ins constitute a commitment from y
