Demystifying Mortgage Points: Make Informed Decisions with Morgan Financial

Navigating the mortgage landscape can be challenging, especially when it comes to understanding complex concepts like mortgage points. In this blog post, we’ll explain the basics of mortgage points, including discount points and origination points, and discuss their pros and cons. We’ll also help you determine when it’s best to consider paying points. If you’re looking for expert guidance on your mortgage journey, trust Morgan Financial, the leading mortgage lender in Brevard County.

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Discount points are prepaid interest that you pay to the lender to reduce your interest rate. Each discount point usually costs 1% of the loan amount and typically lowers your interest rate by 0.25%.

Mortgage points are fees paid to the lender at closing in exchange for a reduced interest rate or to cover loan origination costs. There are two types of mortgage points: discount points and origination points.

 

Read more about mortgage points here!

Origination points are fees charged by the lender to cover the costs of processing and underwriting the loan. These points vary by lender.

Deciding whether to pay points depends on your financial situation and how long you plan to stay in your home. Paying discount points might make sense if:

    • You have cash available for upfront costs
    • You plan to stay in the home long enough to recoup the investment through interest savings
    • You want to lower your monthly mortgage payments

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