Points

From Real Estate

In real estate, points, also called discount points, are one percent (1%) of the amount of the mortgage loan. For example, if a loan is for $35,000, one point is $350. Points are charged by a lender to raise the yield on his loan at a time when money is tight, interest rates are high, and there is a legal limit to the interest rate that can be charged on a mortgage. Buyers are prohibited from paying points on HUD or VA guaranteed loans. On a conventional mortgage, points may be paid by either buyer or seller or split between them.

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