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Host: What is a point? Jeff Thomas: A point is very simple. It's 8% of the loan amount. So, if you have a $100,000 loan amount and your loan officer says, Okay this program requires one point, well then that's going to be a $1000, a half a point would be $500. It doesn't matter what they call it. Traditionally the loan officers can get paid by an origination fee, a discount point would go to buy your rate down, so you get a better rate and if you are dealing with the mortgage broker they may have a mortgage broker fee.
But the easiest way to alleviate the issues with those is just ask your loan officer, how many point are we charging so when you get the closing, if he says they are charging you two points, well then it will be one plus one. If he says, one and you get the closing and there is an origination fee plus a discount, well then you know something was up because one plus one is not one, it's two.
So if you ask them total number of points, then you'll be able to figure out exactly what's going to happen. So, it doesn't matter what you get charged or what they call them, it just matters what happens at closing.
Expert: Jeff Thomas
Mortgage Advisor
Jeff Thomas is a Mortgage Advisor and Financial Educator with Family Lender, Inc. located in Fairfax, Virginia. Jeff has seen the mortgage business change significantly in the 15 years he has been in the business. Changes such zero down loans, to relaxed underwriting guidelines to borrowing more than the house is actually worth on a purchase or refinance transaction. With the changes in the mortgage industry, More »
About This Video
In this video, mortgage advisor, Jeff Thomas describes how to purchase your first home and the process you must go through to obtain a mortgage. This video is designed for first time homebuyers and also provides More »
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Tags: Mortgage, House, Purchasing, Buying, Credit, Payment
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