What are basis points?
Buyers today, especially first time buyers have lots of questions. It is interesting to see what questions they come up with.
Why do we all use so much jargon? A client today emailed and asked me the above question after having emailed our mortgage provider and asked several other questions, basically about locking a loan. The mortgage provider's reply included the term "basis points". Why not just say so much per cent? Why use a new term the buyer may not understand. This is why the consumer is confused, we change and intermix terms, and depending where you are different terms can refer to the same thing.
For example, down money, earnest deposit, hand money, flesh in the game, first deposit are examples given recently by an attorney for the same amount of money given with the agreement of sale. No wonder our buyers are confused, he sees these all within one state, maybe yours has different phrasing?
So, I explained basis points are a way to calculate how much will be charged for a lock for example, so 100 basis points equals 1%, 50 basis points equals 0.50%.
I know what question I am adding to my FAQ's as soon as I can.