Points in a mortgage are finance charges or prepaid interest. One point is equal to 1% of the mortgage loan amount. The lender who uses the loans interest rate and the present market situation in determining the mortgage points due determines mortgage points. The points are collected at the time of closing. The more mortgage points you pay the less interest you’ll pay.
If you intend to keep your house for longer than 3 years it’s advisable to pay the mortgage points up front to save money with a smaller interest rate if you are able to afford it.
The two greatest benefits of mortgage points are lowering your interest rate and tax breaks for the home owner.
