Anonymous
Posted on: 06th Jul, 2005 12:05 am
I have been approved for a mortgage. Do i have to pay points?
Hi Guest,
Welcome to the forums.
It is not necessary to pay points for a mortgage. Points consist of a percentage of your loan amount, with one point being equal to one percent of the loan amount. Points are paid with closing costs so that the interest rate can be lowered. But in case you don't go for it, you will be offered a loan with high interest rate. Therefore I would advice you to pay the points rather than pay a large interest throughout the loan term.
Please let us know if you have any other query.
Regards
Jessica.
Welcome to the forums.
It is not necessary to pay points for a mortgage. Points consist of a percentage of your loan amount, with one point being equal to one percent of the loan amount. Points are paid with closing costs so that the interest rate can be lowered. But in case you don't go for it, you will be offered a loan with high interest rate. Therefore I would advice you to pay the points rather than pay a large interest throughout the loan term.
Please let us know if you have any other query.
Regards
Jessica.
I have been approved for a mortgage. I want to know how much less interest i'll give if I buy points?
Hi Guest,
Welcome to the forums.
You haven't mentioned the type of mortgage you have been approved for. Anyway, considering a 30 year fixed rate mortgage, each discount point (1 point equals 1% of the loan amount) reduces the interest rate by 0.125%. This means that if you are offered a rate equal to 8% and you pay points at closing, then your modified interest rate will be 7.875%. The lender reduces the interest rate since he gets a huge sum at closing rather than through the monthly mortgage payments.
We hope that this information will be useful for you.
Please write back to us if you have any other query.
Regards
Jessica.
Welcome to the forums.
You haven't mentioned the type of mortgage you have been approved for. Anyway, considering a 30 year fixed rate mortgage, each discount point (1 point equals 1% of the loan amount) reduces the interest rate by 0.125%. This means that if you are offered a rate equal to 8% and you pay points at closing, then your modified interest rate will be 7.875%. The lender reduces the interest rate since he gets a huge sum at closing rather than through the monthly mortgage payments.
We hope that this information will be useful for you.
Please write back to us if you have any other query.
Regards
Jessica.