Points are a one-time fee that a borrower pays to lower the interest rate.
Points are defined as a percentage of your loan amount, with one point being equal to one percent of your loan. For example, if you borrow $200,000, one point would be equal to $2,000. Paying one point will generally reduce your interest rate by approximately .25%.

An alternative to paying points is to receive a "credit" from the lender in exchange for a higher interest rate. Whereas points are added to your closing costs, a credit is used to reduce your closing costs. Once again, you can receive a credit of approximately one point by raising your interest rate .25%.

Whether you choose to pay points or receive a credit, this amount will be applied to your closing costs when your loan funds.

Home Buyer Tip

Borrow up to 100% without paying mortgage insurance. By obtaining both a first and second loan instead of a single loan.

Homebuyers can borrow up to 100% of their home's value and avoid paying private mortgage insurance (PMI).

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