What are points?
Points are loan fees paid to lenders. 1 point=1% of the loan amount. On a $100,000 loan 1 point is $1000. Points may be further classified into origination points or discount points. Origination points are charged by a mortgage company as a fee to process and approve your loan, while discount points are used to buy down the rate of interest. When a mortgage company states that a loan has 2 points be sure to ask them in the 2 points includes both discount and origination points.