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Points on Your Loan

The amount of points you are being charged on your loan, is basically the amount of fee’s that you are paying the lender for doing the loan for you.

If you look carefully at your Good Faith Estimate (GFE), that the lender is required to send you, look closely for the line that says loan origination agreement, this is the technical term for points.

Each point you are paying on your loan, is 1% of the total amount of the loan. (One percentage point).

Lets suppose you are getting a loan for $150,000.00 and the lender is charging you two points, the total loan origination fee would be $3000.00.

Keep in mind that nobody works for free, but the loan origination fee is negotiable, so work with the lender or broker to pay as little points as possible.

Another thing to keep in mind if you are looking for a mortgage without points, is that the lender will hit you in other ways, for instance, charging you a higher interest rate. It bears repeating. Nobody works for free. I have often had people tell me that they got a great rate on a mortgage with no points, I normally smile and congratulate them. However, I'm not here to sugar coat the mortgage industry, be prepared to pay fees in one way or the other. It just comes with the territory.

Closing Costs

Back End Points vs. Front End Points

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