Mortgage
points are also called discount points, points, loan discount
points, loan origination fees or maximum loan charges. A point
is equal to 1 percent of the loan amount. For example, 1 point
on a loan of $150,000 equals $1,500. Lenders consider mortgage
points as interest that you pay in advance. As a result, the
more points you pay when you close the loan, the lower your
interest rate. If you qualify, you may be able to deduct mortgage
points in the year you close the loan for tax purposes. Otherwise,
you will have to amortize the points paid over the term of
the loan.
|
