what are points when applying for a home equality loan?

Answer 1

Points are money you pay to the loan company to get a lower interest rate.

Try to find a low rate with no points.

Answer 2

A point is equivalent to 1% interest that is paid up front, usually in return for a reduction of the interest rate. So, for example, on a $50,000 loan, if you are required to pay 2 points you will pay 2%, i.e. $1,000, and your loan will be adjusted accordingly. Check the rules, though, points don't always work to your advantage. Points paid for a home loan or home equity loan are also tax deductible in the year they are paid.