What are points and do I have to pay points or an origination fee?
Points are a percent of the loan amount. 1 point is 1% of the loan amount you are borrowing. If you paid 1 point for a $100,000 loan it would cost $1,000.00. They are a fee that is charged by a mortgage company or lender to discount the rate or give you a lower rate in exchange for more money upfront. Beware, points can be called many different things such as Origination Fees, Broker Fees, Commitment or Lock-in Fees. Dont be fooled. If it is a fee based on a percentage of the loan amount and it is being charged by the bank or broker it is points in some form or another. In almost all cases you do not have to pay points. As a general rule points rarely make good financial sense if they can be avoided. Over 80% of the loans we do have absolutely no points. Generally, unless you need a more difficult or special type of loan, you should not have to pay points.
