POINTS?

Financing, Hard Money Lenders, Private Money
1

Just a simple question…

What are points?

2

The number of 1% fees the originator of the loan takes as a fee.

$100,000 Loan
3 points = $3,000

Try to never pay points unless you have to and if so as few as possible. Most points are rolled in to the balance of the loan.

3

Thanks,

Seems expensive!

4

It could be expensive and not recommended for investors!!! Let’s face it if you’re going to be buying multiple properties why should you pay points. The only time you may want to pay points is if you are going to be in the home for more than 7-8 years (so you can profit from the up front cost which takes about 3-4 years), and you want your payment to be a certain amount each month (like for your primary) so in this case you may want to pay Discount Points, to get a particular rate. There are many ways a point might show up on a GFE: Origination, discount and broker fee. For investment properties you should try not to pay any of these, origination and broker fee are going into the broker’s pocket and a discount point is going to require more up front money pay a little higher now and less at closing is always much easier to digest. Look at this math example:
100,000 purchase 1 point equals $1000. If the difference in rate is only equal to 20 to 50 bucks a month and you sell in a year, it would have only cost you $240 to $600 throughout the year as opposed to $1000 up front

5

thanks,

I plan on talking to a broker who does 100% financing tomorrow. I think you for your help. I’ve learned alot.