In mortgage lending, points are a form of upfront fees
Points in Mortgage Lending
Points that borrowers can choose to pay to the lender in exchange for a lower interest rate on their mortgage loan. Each point typically represents 1% of the total loan amount.
There are two types of points: discount points and origination points. Discount points are fees paid at closing to reduce the interest rate on the loan, effectively lowering the monthly mortgage payments over the life of the loan. Origination points, on the other hand, are fees charged by the lender for processing the loan application.
Paying points can be beneficial for borrowers who plan to stay in their homes for a long time, as the reduced interest rate can result in significant savings over the life of the loan.
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In mortgage lending, points are a form of ......