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Understanding Mortgage PointsWhen a mortgage broker asks a borrower to pay points, he or she is asking for a lending fee expressed as a percentage of the value of the loan. For example, two points on a deal worth $100,000 works out to $2,000. Sometimes, a lender may require the borrower to pay "origination points" on a mortgage. This fee allows the lender to recover many of their costs sooner in the deal rather than waiting to recoup them as part of interest payments. Many lenders use origination points to advertise lower interest rates to potential home buyers. Though their interest margin is thinner, these institutions improve their cash flow by pulling in these profits on the front end of the loan. Along the same lines, a lender may offer a borrower the chance to pay "discount points" to qualify for a greatly reduced interest rate on a new mortgage. In these deals, the customer can pay an extra percentage point or two of the loan's value as an upfront investment. In return, the lender agrees to knock the interest rate down by a quarter of a percent or more. Though the borrower surrenders more cash at closing, they enjoy tremendous savings over the life of the loan. In this hyper-competitive, internet-fueled mortgage market, a handful of innovative lenders have experimented with "rebate points." They work very much like discount points, but in reverse. Cash-poor borrowers who want to purchase a home with little or no money down can receive a rebate of a percentage of the home's value. In exchange, they agree to accept a higher interest rate or a prepayment penalty. Though these deals work against the customer's long-term interests, they provide a valid solution for many prospective home buyers without the liquid capital needed to close the deal on a conventional mortgage. Whenever dealing with points, borrowers should weigh all their available options to understand the best long-term deal for their situation. Home buyers with the ability to afford a large down payment and closing costs will usually benefit from paying discount points. Customers with spotty credit histories may have to lump origination points to a lender that's willing to run a manual underwriting review on their case. Kevin Adelsberg is a writer for FasteMortgage.com. For additional articles and an extensive resource for everything about mortgages, please visit us at http://www.FasteMortgage.com
 MORE RESOURCES updated Wed. July / 24 / 2019Refinance mortgage rates: 10 steps to get the best deal The Mortgage Reports How do you get the best refinance mortgage rates? Plan ahead and have a strategy. Here's how to do it in today's low-rate mortgage marketplace. Good time to refinance your mortgage? Fox Business The 30-year fixed mortgage rate recently reached its lowest levels since September 2017. Consider a Mortgage Refinance, Even If You Bought Recently NerdWallet Mortgage rates have fallen so much lately that millions of homeowners might benefit by refinancing — even if they bought a home in 2018. How to Refinance a Mortgage and When to Do It TheStreet.com Your mortgage can cost a lot of money over time. Here's how it might just cost a little less....BAC. Refinance rates decline for Friday Bankrate.com Several closely watched refinance rates decreased today. If you're shopping for a mortgage, see what that means for you. Refinance mortgage rate moves up for Thursday Bankrate.com Refinance rates were mixed, but one key rate cruised higher. See what that means for your refinance. Will mortgage rates drop even more? Should I wait to refinance? The Mortgage Reports Mortgage rates are near historic lows, but maybe you've heard that nagging voice, the one which says “wait just a little longer. Rates can drop lower. Debt Consolidation with Mortgage Refinancing: How to Pay Off Debt with a Refinanced Mortgage Zing! Blog by Quicken Loans Considering a mortgage refinance to consolidate debt? Before you do, read our guide to make sure you understand how it works along with the pros and cons. Refinance rates advance for Monday Bankrate.com Several benchmark refinance rates cruised higher today. If you're shopping for a mortgage, see what that means for you. How the Fed’s interest rate decisions affect mortgage rates Bankrate.com If the Fed lowers rates at their upcoming July 30-31 meeting, only some mortgage borrowers need to pay attention, including those with adjustable-rate loans. Refinance mortgage rate retreats for Tuesday Bankrate.com Refinance rates were mixed, but one key rate ticked downward. If you're shopping for a mortgage, see how your payments might be affected. More than 8 million homeowners are leaving big money on the table by not refinancing CNBC Mortgage rates have been on a roller coaster for the last year, but now they're sitting at the bottom of the track, and that is giving a major boost to the number of ... Refinance rates trend higher for Wednesday Bankrate.com Several closely watched refinance rates cruised higher today. See what that means for your refinance chances. ARM, HELOC mortgage borrowers could get a break if Fed lowers rates Bankrate.com Some borrowers might see lower monthly payments come the end of July if Federal Reserve Chairman Jerome Powell lowers interest rates. The federal funds ... Refinance rates retreat for Wednesday Bankrate.com Several key refinance rates trended down today. See what that means for you if you're in the market for a mortgage. 6 Strategies To Make Your First Mortgage Refinance A Success CBN News Mortgage rates may be rising but there's still room to refinance your home loan. Use these six ways to get the best deal on your first mortgage refinance. Should you refinance your mortgage now? Clark.com - Clark Howard Money expert Clark Howard has a simple rule for when to refinance your mortgage. See if it applies to you and how you can hit a "grand slam" if you do it. Mortgage rates today, July 22, 2019, plus lock recommendations The Mortgage Reports Average mortgage rates barely moved on Friday, as we predicted. 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See what that means for your chances of scoring a killer refi rate. Weekly mortgage rates fall further, but only refinance applications rise CNBC Mortgage application volume was 40% higher than a year ago, largely because lower rates are strengthening the refinance market. Mortgage rates rise on expectation of Fed’s possible cut in short-term interest rates Washington Post Mortgage rates rose this week spurred largely by rising optimism about the Federal Reserve's possible move at the end of the month to cut short-term interest ... Refinance rates tick lower for Tuesday Bankrate.com Multiple closely watched refinance rates sunk lower today. Average rates nationwide for 30-year fixed and 15-year fixed refinances both declined. Meanwhile ... Mortgage rates today, July 15, 2019, plus lock recommendations The Mortgage Reports Average mortgage rates rose again on Friday, as we predicted. However, for the second day running, the increase was sharper than we expected. So those ... It's Your House, Only Cheaper — Why Homeowners Should Refinance Now to Save Big - PaperCity Magazine It's Your House, Only Cheaper — Why Homeowners Should Refinance Now to Save Big PaperCity Magazine Are you leaving money on the table when it comes to your home mortgage payments? If you are one of 5.9 million, homeowners who could lower interest rates ... U.S Mortgage Rates – Rates Rise for Just the 3rd Time in 13-Weeks Yahoo Finance Mortgage rates were on the rise once more, though they could come under pressure should tension in the Middle East rise further… Mortgage rates today, July 19, 2019, plus lock recommendations The Mortgage Reports Average mortgage rates barely moved yesterday, as we predicted. What small move there was, turned out to be friendly. And the small fall took rates very close ... Fed interest rate cuts to usher in new era for home buyers The Mortgage Reports Home prices are high but there's hope for home buyers. Falling rates should make homeownership more affordable as the Fed seeks to cut rates in 2019. Mortgage rates dip for Monday Bankrate.com Several key mortgage rates receded today. If you're shopping for a home loan, see how your payments might be affected. Over 8 million homeowners are leaving big money on the table by not refinancing The Coloradoan Refinancing can lower monthly payments, but it can also provide easy money for homeowners with high levels of home equity. Refinance rates ease for Wednesday Bankrate.com Several closely watched refinance rates dropped today. If you're shopping for a mortgage, see how your payments might be affected. Mortgage rates sink to a 31-month low after Federal Reserve expresses uncertainty about the economy The Washington Post Mortgage rates hit their lowest levels since November 2016 on the heels of the Federal Reserve meeting last week. According to the latest data released ... 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Refinance mortgage rate advances for Saturday Bankrate.com Refinance rates were mixed, but one key rate floated higher. If you're shopping for a home loan, see what that means for you.
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