This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these template messages)
This article may be too technical for most readers to understand. Please help improve it to make it understandable to non-experts, without removing the technical details.(August 2014) (Learn how and when to remove this message)
This article possibly contains original research. Please improve it by verifying the claims made and adding inline citations. Statements consisting only of original research should be removed.(June 2015) (Learn how and when to remove this message)
The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. You may improve this article, discuss the issue on the talk page, or create a new article, as appropriate.(June 2015) (Learn how and when to remove this message)
(Learn how and when to remove this message)
Discount points, also called mortgage points or simply points, are a form of pre-paid interest available in the United States when arranging a mortgage. One point equals one percent of the loan amount. By charging a borrower points, a lender effectively increases the yield on the loan above the amount of the stated interest rate. Borrowers can offer to pay a lender points as a method to reduce the interest rate on the loan, thus obtaining a lower monthly payment in exchange for this up-front payment. For each point purchased, the loan rate is typically reduced by anywhere from 1/8% (0.125%) to 1/4% (0.25%).[1][2]
Selling the property or refinancing prior to this break-even point will result in a net financial loss for the buyer while keeping the loan for longer than this break-even point will result in a net financial savings for the buyer. Accordingly, if the intention is to buy and sell the property or refinance, paying points will cost more than just paying the higher interest rate.[3][4]
Points may also be purchased to reduce the monthly payment for the purpose of qualifying for a loan. Loan qualification based on monthly income versus the monthly loan payment may sometimes only be achievable by reducing the monthly payment through the purchasing of points to buy down the interest rate, thereby reducing the monthly loan payment.
Discount points may be different from origination fee, mortgage arrangement fee or broker fee. Discount points are always used to buy down the interest rates, while origination fees sometimes are fees the lender charges for the loan or sometimes just another name for buying down the interest rate. Origination fee and discount points are both items listed under lender-charges on the HUD-1 Settlement Statement.
The difference in savings over the life of the loan can make paying points a benefit to the borrower. Any significant changes in fees should be re-disclosed in the final good faith estimate (GFE).
Also directly related to points is the concept of the 'no closing cost loan', in which the consumer accepts a higher interest rate in return for the lender paying the loan's closing costs up front. In some cases a purchaser can negotiate with the seller to get them to pay seller's points which can be used to pay mortgage points.
^"Ginnie Mae: Your Path to Homeownership". Archived from the original on 2008-02-08. Retrieved 2008-02-17.
^"Questions About Mortgage Points". Mortgage Professor. 2008-11-15. Retrieved 2015-06-14.
^Anisha Sekar. "What Are Discount Points?". nerdwallet. Retrieved May 25, 2017.
^"What are mortgage points?". Better Money Habits. Retrieved May 25, 2017.
Discountpoints, also called mortgage points or simply points, are a form of pre-paid interest available in the United States when arranging a mortgage...
A discount store or discounter offers a retail format in which products are sold at prices that are in principle lower than an actual or supposed "full...
Discounts and allowances are reductions to a basic price of goods or services. They can occur anywhere in the distribution channel, modifying either the...
loan is $1,000. Discountpoints are used to buy down the interest rates, temporarily or permanently. Origination fees and discountpoints are both items...
trust from the homeowner for the face amount of the loan, adjusted for discountpoints and other price adjustments. Mortgage banks sell the loans because...
The discount window is an instrument of monetary policy (usually controlled by central banks) that allows eligible institutions to borrow money from the...
"Taxes, Points and Rationality in the Mortgage Market". Real Estate Economics. 15 (3): 168–184. doi:10.1111/1540-6229.00426. "What are (discount) points and...
disposed of Devisee – beneficiary of a will and testament Disability Discountpoints Disintermediation Documentary stamp Documentary stamp tax Domania Dominant...
far apart those two points are. Exponential discounting is not dynamically inconsistent. A key aspect of the exponential discounting assumption is the property...
A discount function is used in economic models to describe the weights placed on rewards received at different points in time. For example, if time is...
MD S.p.A. is an Italian global discount supermarket chain, based in Gricignano di Aversa, Italy. The company was founded in the 1994s by Patrizio Podini...
up front costs, generally paid in origination fees, broker fees or discountpoints. This “may [be used to] wipe out or offset other loan costs, like Loan...
to a fuel discount of 4c per litre or 8 bonus Flybuys points per litre at Coles Express. This discount is obtained by providing a discount voucher, printed...
a card, customers typically receive either a discount on the current purchase or an allotment of points that they can use for future purchases. Hence...
2017) Discountpoints paid to discount the interest rate on up to two homes; points paid upon acquisition are immediately deductible, but points paid on...
lock their phones, and start accumulating points.[citation needed] Points are then used to get discounts at local and online businesses. Richardson realized...
FBNQuest Merchant Bank previously known as Kakawa Discount House is one of the five operational discount houses in Nigeria which serves as government financial...
liked, 0 < β < 1. {\displaystyle 0<\beta <1.} Discounted utility calculations made for events at various points in the future as well as at the present take...
"Championship Belt" touchdown celebration, which State Farm renamed as the "Discount Double Check". Rodgers has also been featured in Pizza Hut advertisements...
a coupon is a ticket or document that can be redeemed for a financial discount or rebate when purchasing a product. Customarily, coupons are issued by...
evidence for prosecution if the shoplifter is allowed to pass checkout points or leave store premises with unbought merchandise. Many stores will use...
physical card online. Accrued points can then by redeemed at Woolworths Group stores (at a rate of 2,000 points for an A$10 discount), or converted to 1,000...
operated sites accepting the Woolworths fuel discount. In August 2016, Woolworths Rewards' members could collect points for every dollar spent in any Caltex Woolworths...
corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores in the United States, headquartered...
Marion, Indiana, U.S. Opened in 1978, the mall's anchor stores are Roses Discount Store. Planet fitness & Applebee's are other major tenants. There are 3...