Mortgage rates paying points
Mortgage points are fees you pay the lender to reduce your interest rate. One point equals 1% of the mortgage amount. Typically, when you pay one discount point, the lender cuts the interest rate Mortgage points are fees you pay to your mortgage lender at the time of closing in exchange for a reduced interest rate on your loan. The mortgage lender benefits from this transaction by receiving cash upfront instead of collecting incremental interest payments over time, while you benefit from having a lower interest rate. Beware of Adjustable-Rate Mortgage Points. If you’re thinking about getting an adjustable rate mortgage (ARM) loan, don’t do it! ARM loans are one of the top mortgages to avoid because they allow lenders to adjust the rate at any time. This just transfers the risk of rising interest rates (and monthly payments) to you—yeah, count us out.