Welcome To Home Loans

Debt Consolidation

Debt Consolidation, FHA, Financing, Loans, Mortgage, Rates, Refinancing

Mortgage and Discount Points. What are they?

Discount points are fees specifically used to buy-down your rate. This makes them different from “origination points”, which are fees that a bank charges to “do your loan”.

Discount points also can be tax-deductible, depending on which deductions you can claim on your federal income taxes.

To really benefit from it, it’s important to consider how long it will take for you to recoup the cost of buying points. This is called the break-even period. You will be able to know if buying discount points will be financially beneficial for you at the long run.

We at Home Loans On Demand are committed to your real estate financial needs as we partner to assure you receive only the best home-loan solution specifically suited to your financing and lifestyle needs.

Debt Consolidation, Discount Points, FHA, Home Loans, Loans, Mortgage, Rates, Refinance, Refinancing

Loan Origination Fees Vs Discount Points

When taking out a mortgage, you probably were considering buying discount points whether for a new purchase or to refinance an existing loan, one decision you’ll undoubtedly will have, is to   make sure it’s worth paying discount points to obtain a certain interest rate on your mortgage.

Before going any further, it’s important to note that the term “points” gets thrown around loosely, and can refer to the loan origination fee and/or discount points. The loan origination fee is the commission charged by the bank or the loan officer for working on your loan, where on the other hand discount points are used to buy down your interest rate.

It’s an important distinction because the loan origination fee pays for the costs of originating the mortgage and these fees involves:

  • Paperwork
  • Verification’s
  • Calculations done to determine your mortgage rate

Finally, it is important to know that a good credit score may help you get a lower origination fee, and an excellent credit score can be an even better bargaining tool in your negotiations.

While paying discount points (prepaid interest) is entirely optional depending on the rate you desire. Discount points are a one-time, upfront mortgage closing cost which give a mortgage borrower access to “discounted” mortgage rates as compared to the market.  

We at Home Loans On Demand are devoted to your real estate financing needs as we partner to assure you receive only the best home-loan solution specifically suited to your financing and lifestyle needs