Points on mortgages?

As the market shifts, we may see points come back into favor. Why?

From a WP article – A weekly survey of lenders by the Mortgage Bankers Association  on Wednesday reported a 15 percent drop in demand from a year ago for loans to buy homes and mortgage refinancing. …

In some cases, lowering the mortgage rate by paying points can actually help a borrower qualify for a home loan. That is because much of the lender’s qualification process hinges on determining a borrower’s ability to make the monthly loan payments.

Basically, you will be paying the lender to take a risk. A point is equal to 1% of the loan amount. If you are getting a $250,000 mortgage, a point will be $2500. Simple – and expensive. Most likely, in my opinion, is that Sellers will be offering to pay a Purchaser’s points as an incentive to induce them to both visit and make an offer on their homes.

Be sure to pay attention to how the points are described/disclosed in the Good Faith Estimate (GFE). Sometimes they are points, pre-paids, lender fees … read your GFE and ask questions!

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