2006-12-21 09:11:52 · 8 answers · asked by matt12882003 3 in Business & Finance ➔ Renting & Real Estate
Points are the fee that the lender and/or broker gets. 1 point = 1% of the loan amount.
2006-12-21 09:16:43 · answer #1 · answered by Jacy 4 · 0⤊ 1⤋
Prepaid interest. All else being equal (same individual same availability of loan products) the points will go up as the interest "rate" over the life of the loan goes down. It's all interest, it's just shifted from one place (loan life) to another (loan inception).
The good news is you can deduct it as mortgage interest in the year you pay them (so long as it's your primary residence). The bad news is you are paying them. Get a great credit rating and a great loan originator and you can avoid points (and most fees) and save money overall.
And yes, 1 point is 1%.
2006-12-21 17:17:15 · answer #2 · answered by Rose 2 · 0⤊ 0⤋
Points are pre-paid interest. Points are typically used to buy down the interest rate of the loan.
1 point = 1% of the loan amount.
One correction to deductibility, though. They are fully deductible in the year paid ONLY on a purchase-money mortgage. When you refinance the points must be spread out over the life of the loan.
2006-12-21 17:18:36 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 0⤋
i just re-fi'd my mortgage and i dont know exactly how to explain other than they cost a certain percentage of your mortgage like 1% or something and u buy them to bring down the percent of your mortgage rate. i bought like 3 points and it brough down my rate 3% which is not too shabby but since i was only borrowing 80k it was less thank 3k for the points. most folks dont like points because they cost extra but if you arent borrowing a lot they dont affect the amount that much. not sure if this helps
2006-12-21 17:16:50 · answer #4 · answered by Greenchylde 3 · 0⤊ 1⤋
It is prepaid interest. Pay more points, pay less on your monthly payment due to a lower interest rate, since the bank already got some interest from you. Pay no points, you will pay a higher rate.
2006-12-21 17:41:06 · answer #5 · answered by kingstubborn 6 · 0⤊ 0⤋
points are the brokers or lenders fee. it's the money that they get from the loan closing.
2006-12-21 17:14:37 · answer #6 · answered by Anonymous · 1⤊ 1⤋
that is up front money that the lender get from you and they call it points.
2006-12-21 17:43:44 · answer #7 · answered by roy40372 6 · 0⤊ 0⤋
If I am not mistaken a point is one months payment..One point =one months payment
2006-12-21 17:29:10 · answer #8 · answered by buzzwaltz 4 · 0⤊ 1⤋