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What are mortgage points?
What are mortgage points? And how do they work? What are the benefits or drawbacks of mortgage points? Is there a reason why a lender would offer that option and another lender wouldn't?
Asked By Will | Concord, NH | 611 views | Finance Legal Info | 1 year ago
Answer(3)
Jamie Merwin
ZMD REALTY
Mortgage points, also known as discount points, are a form of prepaid interest. You can choose to pay a percentage of the interest up front to lower your interest rate and monthly payment. A mortgage point is equal to 1 percent of your total loan amount. For example, on a $100,000 loan, one point would be $1,000.
- 1 year ago
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Suzanne Damon
The Damon Home Team-EXP Real Estate
Mortgage points are basically prepaid interest. You pay upfront at closing to “buy down” your interest rate. One point usually equals 1% of the loan amount and lowers your rate by about 0.25%, though it varies.
Benefits: If you plan to stay in the home long term, points can save you a lot in interest over time.
Drawbacks: They cost cash up front, so if you sell or refinance too soon, you may not break even.
Some lenders push points as a way to make monthly payments look more affordable, while others may not offer them depending on their pricing structure or how competitive they want to be.
Benefits: If you plan to stay in the home long term, points can save you a lot in interest over time.
Drawbacks: They cost cash up front, so if you sell or refinance too soon, you may not break even.
Some lenders push points as a way to make monthly payments look more affordable, while others may not offer them depending on their pricing structure or how competitive they want to be.
- 1 month ago
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Michelle Smith
Century 21 New Millennium
A point is 1% of your mortgage amount. Think of it as interest that you pay up front. Lenders charge points if you have a lower credit score and also to buy down your interest rate.
- 1 year ago
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