What Are Points in a Mortgage Closing?
Points in a mortgage closing are additional costs imposed by your lender. Distinguishing between the types and purposes of these points can save you money on your mortgage and your taxes.
Other People Are Reading
-
Size
-
All mortgage points cost 1 percent of the mortgage amount. For example, if you have a $315,500 mortgage, each point would cost $3,155.
Types
-
Mortgage points can be either discount points or origination points, according to Bankrate. Discount points reduce the interest rate on your mortgage while origination points represent closing costs. Discount points are generally optional while origination points are not.
-
Significance
-
Discount points paid can be deducted from your income taxes in the year that you pay them, as long as you itemize your deductions. Origination points do not result in a tax deduction.
-
