Points and fees paid up front that are used to lower the interest rate. One percent of a new loan amount equals one point. This is the fee you pay a bank or institution for lending you money. So, if your loan amount is $100,000 each point equals $1,000.
Who
Pays Points:
Generally,
there's three scenarios. The buyer usually pays points or fees in FHA
or VA loans. The buyer or seller can pay discount fees in FHA loans
while the seller pays the discount fee in a VA loan. In conventional
loans, points can be paid by either the buyer or seller or split
between the two parties.
Points
Change:
Point
or fees are set by individual lenders. They vary and help determine the
amount of your mortgage.
Points
Are Not Necessarily Locked In.
In
a FHA or conventional loan, points are not usually changed from
commitment to settlement. In a VA loan, points are not locked and
changed based on federal government settings.
Points
Are Tax Deductible:
Points
paid on your home loan are deductible in the year it is paid if the
points meet specific conditions. Those conditions include occupancy
requirements; settlement statements on HUD1; and using the home loan to
either build or purchase. A tax specialist is a good friend to have
when discussing this topic and should be consulted.
This information offered by:Crescent Moon Realty, Inc.. Get your "Free" home buyer guide by contacting Crescent Moon Realty, Inc.
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This information offered by:Crescent Moon Realty, Inc.. Get your "Free" home buyer guide by contacting Crescent Moon Realty, Inc.
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