If you’re like most people who are thinking about buying land for sale in North Florida, you’re probably kicking around the idea of getting a mortgage – and that’s great. Most people do! But if you’re also like most people, you don’t know all the ins and outs of mortgages. (That’s fine, too – that’s why you’re working with a real estate agent and a mortgage professional.)
With that said, you’ll hear the term “mortgage points.” But what are points, and what do they do?
Here’s what you need to know.
What Are Mortgage Points?
Mortgage points can help you lower your interest rate. You buy points, which cost a set amount of money, to bring down your interest ate by a few points. Sometimes you can save thousands of dollars over the life of your loan by buying mortgage points.
There are two types of mortgage points:
- Discount points, which are also called “prepaid points.” These points lower your interest rate but increase your closing costs because you have to pay for them at closing.
- Origination points, which you pay to compensate the loan officer or cover notary fees, prep costs and inspection fees.
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How Much Do Mortgage Points Cost?
Usually, one mortgage point costs 1 percent of the loan amount. If you’re buying a property that costs $300,000, one point would cost you $3,000.
Why Do Lenders Use Points?
The big reason lenders use points is to take your interest rate down. They’re still getting some money out of you – you’re just paying less of it, and you’re paying it up-front. You’ll most likely end up saving quite a bit over time (because you’re paying the lender less).
Are You Buying a Home or Land for Sale in Lake City?
If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.
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