By Marcie Geffner - Credit Karma
Home buyers tend to be laser-focused on getting the lowest possible interest rate for their mortgage. A low rate is desirable because the lower your interest rate, the lower your monthly payment. But a low rate isn’t the only thing you need to consider when you choose a mortgage.
Understanding the point of mortgage points
Mortgages typically involve a variety of fees. Some of those fees are known as “points” because they’re based on a percentage, or point, of your loan amount. One point is equal to 1 percent of your home’s mortgage amount. For example, a fee of one point for a $250,000 mortgage would cost $2,500, while a half-point would cost $1,250.
There are two kinds of points:
- Origination points
- Discount points
Read on: https://www.creditkarma.com/home-loans/i/what-are-mortgage-points/
Home buyers tend to be laser-focused on getting the lowest possible interest rate for their mortgage. A low rate is desirable because the lower your interest rate, the lower your monthly payment. But a low rate isn’t the only thing you need to consider when you choose a mortgage.
Understanding the point of mortgage points
Mortgages typically involve a variety of fees. Some of those fees are known as “points” because they’re based on a percentage, or point, of your loan amount. One point is equal to 1 percent of your home’s mortgage amount. For example, a fee of one point for a $250,000 mortgage would cost $2,500, while a half-point would cost $1,250.
There are two kinds of points:
- Origination points
- Discount points
Read on: https://www.creditkarma.com/home-loans/i/what-are-mortgage-points/