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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