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Mortgage discount points are an optional fee that some borrowers choose to pay to their lender in exchange for a lower interest rate for their mortgage loan.
As a general rule, paying points might be a smart idea if you plan to keep your mortgage for many years. If you plan to sell or refinance within a short timeframe, paying points may not make sense.
Read more: First-time home buyers' guide
The term "points" refers to an upfront fee that's based on a percentage of the loan amount. One point equals 1% of the loan amount, so for a $400,000 mortgage, one point would cost $4,000. Some lenders allow fractional points, such as one-eighth, one-quarter, or one-half of one point.
Mortgage discount points are an optional fee that some borrowers choose to pay to their lender in exchange for a lower interest rate for their mortgage loan.
As a general rule, paying points might be a smart idea if you plan to keep your mortgage for many years. If you plan to sell or refinance within a short timeframe, paying points may not make sense.
Read more: First-time home buyers' guide
The term "points" refers to an upfront fee that's based on a percentage of the loan amount. One point equals 1% of the loan amount, so for a $400,000 mortgage, one point would cost $4,000. Some lenders allow fractional points, such as one-eighth, one-quarter, or one-half of one point.
16 days ago
