Mortgage Tip #2: Points

Points are a part of every mortgage loan. They can be in the the form of Origination Points, Discount Points, Mortgage Broker Points/Fees, Yield Spread, or Service Release Points/Fees. All of these terms really mean the same thing. It all adds up to the amount of money that a lender is compensated for closing your loan.

Most types of points must be disclosed and listed on your Good Faith Estimate. However, service release points can make the Good Faith Estimate look as though there is no payment to the lender as these points are generally not disclosed.

There are many options to consider when paying points. Be sure that all points are explained to you when signing the initial loan application and the final application at the closing (if any changes were made to your initial quote). Lenders are required by law to provide each borrower with an itemized Good Faith Estimate and Federal Truth in Lending shortly after applying for a mortgage loan. These two documents are designed to help borrowers compare offers between lenders to ensure they are receiving the best deal.

Contact a Cornerstone loan officer today to discuss how points may benefit you!