Mortgage Points

Mortgage Points
If you​ have ever gone looking for quotes on​ a​ mortgage in​ order to​ find out just what a​ mortgage might cost you,​ you​ have probably had the​ term points thrown at​ you​ .​
So what are points?
Each point is​ a​ fee and it​ is​ based on​ one percent of​ the​ total amount of​ the​ loan .​
There are a​ couple of​ different points,​ there are discount points and then there are origination points and lenders do not all charge the​ same amount of​ these points .​
Some lenders will charge you​ one point while others may charge you​ three.
Discount points are the​ points that are like prepaid interest on​ your loan that you​ are getting for your new home .​
Every point that you​ purchase will lower your interest rate to​ some extent .​
Most borrowers will be able to​ choose just how many points they want to​ purchase .​
There is​ a​ limit of​ course,​ usually around four points .​
The number of​ points that you​ choose to​ buy will depend on​ how much you​ want to​ lower you​ interest rate .​
One especially good point of​ these points is​ the​ fact that they are tax deductible.
Origination fees are different .​
These fees are used in​ order to​ pay for the​ costs of​ giving you​ the​ loan in​ the​ first place .​
You don't get anything out of​ these points so most borrowers don't like them as​ they are not even tax deductible .​
If you​ can try to​ get a​ loan that does not require you​ to​ get these types of​ points .​
Discount points on​ the​ other hand can be useful to​ you.
The choices that you​ make concerning the​ points to​ get will be affected by a​ couple of​ different things .​
For example,​ how long are you​ going to​ be living in​ this house? And how much of​ a​ down payment are you​ going to​ be putting down? If you​ are thinking of​ settling into this house for the​ long haul then perhaps discount points are a​ good way for you​ to​ go .​
Lowering your interest rate for years to​ come is​ always a​ good thing .​
Before making your decision take stock of​ your situation and see what suits your needs best.

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