What exactly are points, and how do they
affect the loan I get?
Points are the cost to originate a loan.
Within the mortgage industry, the term point equals one percent of
the loan amount. For example, on a $100,000
mortgage, one point equals $1,000. The
amount of points that you pay on a real estate transaction will vary on
the interest rate that you select. Generally,
the lower the interest rate you desire, the more points it will cost you.
Within the mortgage business this is referred to as buying down the
loan. As a consumer, you have the
option to buy down your interest rate, by paying additional points, thus
getting a lower interest rate. You may want to raise the interest rate on
a loan that you will be receiving in order to reduce the amount of closing
costs you are going to pay. This will be determined based upon your savings and reserves to
complete your real estate transaction. Points
for a home loan can range from zero to ten depending on the type of
transaction, your credit profile and the amount of down payment applied
towards the purchase. The points
you will pay on your loan can only be determined once we evaluate your
entire situation.
Landmark Mortgage
specializes in assisting individuals with obtaining home loans.
We can advise you on the best
approach and help you get the house of your dreams!
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