Bangor, Buyers, Mortgages, South Haven
South Haven and Bangor Michigan - Understanding mortage points
July 25, 2008 by tom · Leave a Comment
You need to understand ALL of the costs of your mortgage!
When you’re getting ready to purchase a South Haven or Bangor home, it’s really important that you understand all the different costs that are involved with your home purchase. Today we’ll talk about what it means to pay “points” on your mortgage.
Points are simply fees paid to receive a home mortgage. Consider them your “cost” to get a mortgage. Each point is 1% of the total loan amount. So, one point (one percent) of a $80,000 loan is $800.
The two most common types of “points” are: Loan origination points and Discount points.
Loan Origination Points are the fees that your lenders will charge you to obtain your mortgage. Similar to interest rates, points (or sometimes even fractions of points) will often vary between lenders. Some lenders don’t even charge points, so take the time to shop around.
Discount Points are the fees that lenders charge for the interest rate you’ll pay on a mortgage. Once again, one point equals one percent of the total loan amount. The numbers of points charged changes with the time, location, lender and the local mortgage and investment market.
More discount points may be charged if you have had credit problems. Sometimes, lenders may also only qualify you for a higher mortgage rate than advertised. Those with poor credit may find they have to pay anywhere from 2 to 4 times the points as those with good credit. That’s why keeping a good credit history and comparing all the costs of a mortgage is so important.
Read more: Should you buy mortgage points?
If you think you’re ready to purchase your South Haven or Bangor home, you really owe it to yourself (and your bank account) to really understand your mortgage. I’d be happy to meet with you and answer any questions you may have. Feel free to call me at (269) 580-2259, or email me at tframe (at)kalvan.com
