What are Points??

and how do they work? I'm in contract with a home and now we have to sit down with the mortgage guy to over our mortgage. Can someone please explain to me how these points work??? Does it effect your interest rate? I'm sorry, but I'm so clueless Thank you so much

from my understand me and please correct me if im wrong, you pay money (money from your mortage) to get a lower rate. if you have a lower rate, you will have a lower payment. In otherwards, you are paying more money (to the lender) to get a cheapier rate in return. So depending on your situation, buying a rate will allow you to save money down the long run (similar to my thread)

i believe 1 to 2 points is common and they do work in 1/2's

per point is that much percent added to your mortage (like a fee)

so 1 point is 1% (on a 300k loan, 1 point would cost $3000)

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Posted by cjb88

Points were never brought up to us with our morgage... we have excellent credit and we got a really low rate also, so im wondering if it is something all morgage people do, or just some??

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i heard of the term, just never aware until recently what is was. this was something simliar to me with buying a car... they offered me extra warranty to get me a lower rate... its like a buydown and they do the same for other things

Wow, thanks.

i think that if you put 20% down you will not have to pay any PMI

if you put 10% down you will

I was going to put 15% down and my mortgage broker was going to use a bank that would not charge us PMI

Ask your broker what the difference per month would be if you get a mortgage with PMI or w/out (putting more money down)--i think it could range a few hundred dollars per month