Mortgage points, also known as discount and origination points, are a fee you pay when closing on your mortgage refi. Some lenders require points to qualify for a specific interest rate and you now have the option of paying the origination fee yourself or allowing the lender to pay it for you. Should you pay points when mortgage refinancing or do points drive up your closing costs unnecessarily?
Check out this article from the TruthAboutMortgages.com to learn more about the pros and cons of mortgage points:
“Are mortgage points good or bad?” First off, a mortgage point is defined as a percentage of the loan amount, so if you take out a $150,000 mortgage, one mortgage point would be $1,500.
Paying less when closing on your mortgage refi is a good thing as long as you’re not giving up today’s best refinance rates in exchange for a few thousands dollars in closing costs. Taking a higher mortgage rate in exchange for your mortgage refinancing closing costs means you’ll be paying more for the entire duration of your home loan. Remember that we’re not talking about a car loan you’ll pay off in five years; your home loan sticks with you for a very long time.
There are ways to lower the fees you pay when closing on your refi without giving up the best refinance rates. Avoiding junk fees at closing is easy do to and can save you thousands of dollars in the long run. You can learn more about avoiding lender junk fees and markup with my free Underground Mortgage Videos.