Mortgage Discount Points Guide Available On

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Loan Love posts their new guide to help borrowers decide if paying mortgage discount points is a good deal in their specific mortgage scenario. is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. A new article on the website discuses the pros and cons of mortgage discount points and how to use them wisely.

The article says: “So you’ve been working on your credit and you finally found a mortgage with a rate and terms you like. Only problem is, when you figure out your monthly payments it still seems a little tight; you’d like to find a way to make your monthly payment a little bit lower to give yourself some breathing room. Or, maybe you just got your GFE and you’re wishing you could find a way to eliminate some of those hefty closing costs. In both cases, the answer you’re looking for could be summed up in one little word: Points.”

The Loan Love article then goes on to explain that there are two types of points: points that are paid upfront as a percentage of the mortgage in order to reduce the amount of interest paid monthly and “negative-points” which are paid as increased interest over the course of the loan in exchange for lower loan closing costs. Each type of mortgage points deduction makes sense in different situations. The Loan Love article explains:

“Most times when buyers and mortgage pros talk about points, they’re talking about a percentage of the mortgage that you pay upfront in order to reduce your monthly payments. Usually, a single point is equal to one percent of the mortgage total (so, for a $300,000 mortgage, one point would be $3,000, two points would be $6,000, etc.). Here’s where it gets a little confusing: Just because you pay points upfront doesn’t mean the total amount of your mortgage will be reduced – in this example, your mortgage will still be $300,000. What it does mean is that your interest rate is slightly reduced for each point you pay.”

So-called negative mortgage points may occur when a buyer decides to pay a slightly higher interest rate in exchange for a credit toward closing costs. The article says of this type of points deduction: “Most buyers choose this option when they find closing costs a little too high to handle. The biggest disadvantage here is that paying a higher rate over time – even a slightly higher rate – can add up to a significant increase in the total amount of interest that’s paid. Consider a $200,000 loan at 4.5%. Over a 30-year term, you’d end up paying $164,813.42 in interest. Now say you decide to take a credit toward your closing costs in exchange for an increase in the interest rate to 4.8%. At that rate, after 30 years you would have paid $177,759.06. That’s a difference of $12,945.64. Depending upon the credit you’re receiving and how difficult it would be for you to pay closing costs upfront, you may or may not consider that to be a good deal.”

To find more information that can help borrowers decide if paying points or accepting negative points is a good deal for their situation, please visit for the full mortgage points guide.

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Kevin Blue
Loan Love
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