Tuesday, September 25, 2007

What is a Points?
Answers for Sellers

Points or discount points is an amount of money paid to a lender to obtain a loan at a specific interest rate.  For example:  1 point is equal to 1% of the loan value, paid at closing. Points can be loan origination fees or "discount points" which reduce the interest rate of the loan (you are actually paying a finance charge up front). When a lender, for example, quotes a rate of 8 1/2% with 1 + 1 points, 1 point is for the origination fee and 1 point is for the discount fee.