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What are points?

A point is a percentage of the loan amount, or 1-point = 1% of the loan, so 1-point on a $100,000 loan is $1,000. Points are costs that need to be paid to a lender to get mortgage financing under specified terms. Most loans are quoted with NO points however it is important to look at rates that appear significantly lower than most as most likely they have extra points fees included in order to buy the rate lower than market. Discount points are fees used to lower the interest rate on a mortgage loan.

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