Points, or "discount points," are a confusing concept. One point equals 1% of the loan amount and usually refers to a cost associated with the loan. For example, if there were a $100,000 loan, one point would be equal to $1,000.
Not Required (Do Not Enter in Commas)
Min: 0
Max: 10
Decimals: 2
Remarks
Points can be viewed in a different way as well. They can be looked at as a way to
"buy down" the interest rate of the loan, which amounts to paying interest
up-front. A general rule of thumb is one Point equals 1/8 of 1% in yield. For
example, to lower the interest rate of a $100,000 loan from 9% to 8%, it would cost
"eight points " or $8,000. Confused?
The bottom line: Points are a cost to you. You do not want to pay points unless market conditions leave no alternative. Shop around and find the best deal possible.
Example
If the going market rate is to charge 1.25 Points, enter: 1.25
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