What Are 'Points' (Or 'Discount Points') When Getting A Home Loan?

We are often asked "What are 'points', or discount points?" when clients are applying for a home loan.

First, a point is equal to 1% of the total loan amount. So, 1 point on a $100,000 loan is going to be $1,000.

Discount points are commonly called points. They are used to buy down your interest rate from where rates are currently at when you apply. So, if you are quoted a 5% rate, but you want 4.75%, your loan officer may say that for 1 point you can buy down the interest rate. These are usually permanent buy downs for the life of the loan, but temporary rate drops do exist as well so be sure to clarify.

Points are separate and in addition to other loan fees that may apply and your loan officer should really weigh in the cost and break even point on savings with you before you make a decision to do this.

As always I really recommend you call THE BEST LOAN OFFICER IN MEDFORD, OR:   DAVID DUBEAU 541.292.9663 541.608.2161 www.DavidDuBeau.net

Remember, the first step in buying a home or refinancing is to get pre-qualified on a home loan! Sellers do not like to deal with buyers who might not qualify. There are plenty of different options out there (even other 100% financing options)  

Once you are prequalified, call THE BEST REALTOR IN MEDFORD, OR:  CHERYL MALONE 541.951.1960 - And "Lets Go Shopping"!    

As always, your comments are welcome! You can always follow our blog here.

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