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What is a point and why do I have to pay them?

April 26, 2017pay point

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What is a point and why do I have to pay them?

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A point equals one to five percent of your mortgage amount. Permanent mortgage investors invest money on a yield basis. Yield is a combination of interest rate and points collected. Therefore, the borrower has a choice of a higher interest rate and fewer points or a lower rate. The bank doesn’t care which election is chosen, as they both give a comparable yield on the mortgage investment.