What are Points and Fees, and How do They Affect a Mortgage?
While navigating your home loan journey, you’ll encounter various terms, including “points” and “fees.” These aspects of a mortgage can significantly affect its overall cost.
Points are upfront fees paid to a lender at closing to reduce the loan’s interest rate. One point is equal to 1% of your loan amount. Paying for points can be a strategic way to lower your monthly payments and save on interest over the life of the loan. This is especially important if you plan to stay in your home for a long time.
Fees, on the other hand, can represent a range of costs associated with processing your mortgage application. This can include appraisal fees, attorney fees, and loan origination fees. These fees can vary widely depending on your lender and the specifics of your loan.
Both points and fees are critical factors to understand when comparing mortgage offers, as they can significantly impact the overall cost of the loan. It’s essential to ask your lender for a breakdown of all associated costs and to consider whether paying points makes sense for your financial situation.
If you have any additional questions about points or fees, NIHFCU’s home loan specialists are here to help.
Rates, fees and terms as of April 28, 2024 and subject to change without notice
