What Are Mortgage Points? [Mortgage Points Explained] - YouTube

hi Jen Hernandez Loan with Jen mortgage points  explained stay tuned okay we're back hey like  

share and subscribe I released two mortgage  education videos per week this week we're  

talking about mortgage points explained what our  mortgage points like everyone's pulling their  

hair out there's all these terms on when you  do your research online there there's three to  

four synonymous terms that I really want you to  understand origination fees discount fee points  

mortgage points all of them are the same thing  so here's what they are and here's what they're  

not so first of all you on your cost estimate so  you want to ask the lender for a fee worksheet  

or if you're under contract if you've already  applied you can ask for a loan estimate under  

origination charges charges for originating the  loan aka lender fees there is a subcategory called  

origination charges so that is where this charge  that we're talking about is housed now you don't  

have to pay additional origination charges you  don't have to pay additional points to buy down  

the loan so that's what I'm about to explain so  you really want to pay attention to this again  

we're talking about mortgage points explained  so let's say we have a $200,000 loan and you  

look in the fees and there's a 1% origination or  a discount fee they're all synonymous by the way  

they all get the same result which is a lower  interest rate so let's say that there's that 1%  

fee they're normally without the fee it would be  let's just say three and a half percent I'm making  

but with the fee you're getting 3% sounds like  a great deal right well let's see we need to  

calculate it out so take the $200,000 alone times  one percent one percent equals one point equals  

one percent times the loan amount so that's a  two thousand dollar fee so the difference in the  

interest rate from three and a half percent to 3  percent in this example is fifty five dollars per  

month so if you choose to pay the one percent  fee you're buying down essentially by down is  

another synonymous term to the three percent  rate so you take two thousand dollars divide it  

by fifty five dollar-a-month savings and that  gives you 36 months what does that mean again  

we're talking about mortgage points explained  so what this means is that in 36 months you've  

recovered that $2,000 upfront one-time fee that  you paid at closing as a part of your origination  

aka lender charges and you're starting to save  money at that lower rate by fifty five dollars  

a month so if you plan to stay in the house a  long time or any time after a thirty six months  

so that's three years you're saving money so  it very well could be a very good deal for you  

to pay that money if you have the money for  closing there's some people that don't have  

the money for closing but remember you can get  seller to contribute towards closing costs so  

that can help you out but that's a topic that  you want to make sure it charged hear that talk  

to your lender about again we're talking about  mortgage points explain should you do it should  

you not do it I hope that my example has has led  you through some of some easy steps now the final  

question that many people ask me is are lower  rates available can I buy down can I pay these  

points from to more than 3% the answer is but it  comes to a point where it's law of diminishing  

returns so let's say you get much more towards  below 3% it might cost one point five or two  

percentage points remember that's times the loan  amount so you've just got to do the math ask your  

lender for examples look at the math look at the  upfront cost divide it by the amount that you're  

saving per month and remember that will tell you  how many months it'll take to recover that cost  

so I hope you've learned a lot about this video  mortgage points explained we'll talk to you soon

legacy Mutual mortgage is an Equal Housing  Opportunity lender the opinions expressed  

here do not reflect those  of Legacy mutual mortgage