What are discount points?
Discount points are kind of prepaid interest that a borrower pays as an upfront fee to their lender at the time of closing by paying discounts points. You pay more upfront, but received a lower interest rate and therefore pay less or the life of the mortgage.
In general, one discount point costs 1% of the total loan amount, and paying it upfront of the total loan amount, and paying it upfront can reduce your interest rate.
Typically, by 0.1 to 5% and 0.25% so for example, on a $100,000 loan with an available rate of 4% one discount would require $1,000 due at closing, but your interest rate would then be reduced between 3.75% and 3.875% for the life of the mortgage.
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Lenders benefit from discount points by receiving cash up front. Instead of waiting for money in the form of interest payments over time.
The exact amount that your interest rate is reduced depends
- on your lender
- the type of loan
- current mortgage market conditions
The longer you plan to stay in your home, the more sense discount points make. If you plan to relocate our refinance in the near future, paying discounts is probably not for you.
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Not only do we sell our clients’ homes for more money and faster than the average area agent, but your home is also more likely to sell. According to 2015 MLS statistics, only 71% of area homes sold during their listing term. Compare that to our 95% of homes listed that sold before the end of the listing term. YOUR HOME SOLD GUARANTEED OR WE’LL BUY IT*
To discuss the sale of your home, call The Agardi Team at 718-755-2882 and start packing!
*Agardi Team and the seller have to agree on the price and the closing date.
