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What’s the Point?


Understanding how mortgage points work could save you a bundle on your mortgage over the course of your loan!

Discount points are what people mean most of the time when they talk about a mortgage with points.

Discount points refer to the amount of money that a borrower pays to a lender to get a loan at a specific rate. These points are a way of prepaying interest on the loan.

A mortgage point is not the same thing as a percentage point off of your rate. A mortgage point is to 1% of your loan.

For example, if you have a $250,000 loan, a single point would cost $2,500. Two points would be $5,000.

It depends on the lender, but in general, each point will take about ¼ to 1/8 of a percent of your interest rate.

Are Points a Good Idea?

On the surface, paying for mortgage points to lower your interest rate may seem like an obvious choice.

However, you need to consider a lot of factors. We can help you compare the different options for your unique situation and prepare a break-even analysis.

When deciding whether to pay points, you may need to have an idea of how long you intend to hold onto your mortgage.

We can apply this and other factors to your specific situation as we explain the findings of your break-even analysis.

Call us to find out more!

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