What Does Paying Points Mean

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Sometimes called a discount point, this fee helps you get a lower interest rate on your loan. If you would benefit from a lower interest rate, it might be worth making this up-front payment. However, it usually takes at least several years to recoup the benefits of paying points.

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PDF What Are Points & Who Pays Them? – Title Advantage – A point is equal to one percent (1%) of a mortgage amount. For example, on a $120,000 mortgage, one point is $1,200. Are there different types of points? Customarily, points are quoted as something plus one. For instance, a 10% interest rate with points of three plus one: The one point is a loan origination fee which pays the cost of processing the

For example, if your interest rate at the par rate is 6.25%, but you’d like a rate of 6%, you’ll need to buy down that rate by paying a specified amount (or fraction thereof) of mortgage discount points. As noted, mortgage discount points are a form of prepaid interest that can lower your mortgage rate if.

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