No Point Home Mortgage Loans Versus Pay Closing Costs For A Lower Interest Rate

Points are fees that equal to a percentage of the loan. One point equals 1% of the loan. Points are the points off (discount loan) and collection points (paying the original loan). Points are usually paid to the lender, mortgage broker, or both, the liquidation or completion points are escrow.Origination fares charged by the lender for evaluating, preparing and submitting a proposed mortgage loan. They are often expressed as a percentage (eg 1%). Discount points are additional money can be paid at closing. If you pay more points will be the lowest rate of interest. "In general, you can pull about 1 / 4 to 1 / 8 of a percentage point interest rate reduction for each point you pay," says Keith Gumbinger, vice president of information provider HSH Associates guides. 1 / 4 to 1 / 8 percent savings referred to by Keith Gumbinger is 30 years fixed rate mortgage. The savings can be 1 / 4 - 1 / 2 percent on a 15-year fixed-rate mortgage.Because points are interest payments are deductible in most cases, unless you are refinancing. In this case, the points may be tax deductible, but only for residents of North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Missouri and Arkansas.How long you plan to keep lending? Low interest rates usually require you to pay closing costs and points. But, the points of payment can be good if you plan to live in the house for a long time. HouseBuyingTips.com shows the following from the savings you can expect to pay two points on a mortgage $ 150,000.000 in the course of 30 years, assuming a fixed rate loan.Are move, or think you need the money later? if you have no intention of staying at home for a long time, paying in advance the points will not benefit you. It is advisable to consider 100% funding through a loan or other 80-20 no-down-payment program. If you think you need the money after paying in advance, points will not help you either because refinancing to replace an existing mortgage with a new one and you will lose the savings to pay in advance the points.