mortgage points

Asked by Gina Zachares, Succasunna, NJ Tue Feb 5, 2013

I need to explain mortgage points to a buyer. Any help with trying to explain this would be appreciated.

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Andrew Tisel…, Agent, Clifton, NJ
Wed Feb 6, 2013
Also 1 point is usually equal to 1% of the mortgage amount. So I like to say it is like paying interest upfront to lower your monthly payment. This is sometime done to make the monthly payment more affordable and help a low income person qualify for the loan.
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Paul Marzolla, Mortgage Broker Or Lender, Fort Lee, NJ
Tue Feb 5, 2013
I find it easier to say than type so I'll try not to lose you. With most banks, interest rates comes at either a charge (paid buy borrower) or a credit (paid by lender). "Points" would be a charge paid by your buyer in order to secure a lower interest rate than the par rate offered. If your buyer took a rate higher than the par rate they'd recieve what's referred to as a lender credit which would be used to minimize settlement charges (closing costs, pre-paids, etc.). Bottom line, with points your buyer is paying for the rate.
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