Question:

Mortgage Points Definition

Answer:

Mortgage points are percentages of the loan amount. One mortgage point equals one percent of the loan. Mortgage points are often bought off the loan in order to reduce the interest rate.

Loan origination fee, broker and lender's fee are often expressed in points, as well. The loan origination fee may consist of up to 3 points, that is, up to 3% of the loan.

Often people wonder whether to buy home mortgage points, or not. Buying mortgage points decreases the monthly payment. Before deciding whether to pay points or not, you should run some calculations to see how in fact your payments will be reduced.

Another reason to be paying points other than reducing monthly mortgage payment is to enjoy greater tax deduction benefits.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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