ESTIMATE
YOUR CLOSING COSTS
How
Discount Points And Lender Rebates Work
Lenders
Determine how much rebate is paid back on various interest
rates. The rebate depends on how many you choose to get back.
If
you pay more points then you will get the lower rate. By getting
the rebate and getting the higher rate this will reduce your
closing costs.
Example:
8.00% Loan with Zero Points
|
Interest Rate
|
Discount Points/(rebate)
|
|
7.75%
|
1.00
|
|
8.00%
|
0.00
|
|
8.25%
|
(1.00)
|
Paying
Discount Points
Typically each discount point you pay it lowers you interest
rate by 0.25%. If your interest rate is 8.00% you could pay
the lender one discount point to reduce the interest rate
to 7.75%. On a $100,000 loan you could pay $1000 to reduce
it.
Getting
Your Rebate Points
Typically each rebate point you receive increase your interest
rate by about 0.25%.
So,
by using an 8.00% rate with zero points, you could receive
one rebate point in exchange for increasing your interest
rate to 8.25%. Which on a $100,000 loan, you could receive
$1000 dollars toward your closing costs.
Note
that you can't get cash back from discount points, you can
only reduce some of your closing costs. Costs they don't cover:
Title Insurance, prepaid hazard insurance, prepaid interest,
mortgage insurance impounds, hazard insurance impounds, and
property tax impounds.
MORE
INFORMATION.....
Discount
Points
You can use discount points to control the cost of your mortgage.
Points
and Taxes
Points are tax deduction.
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