Making Sense Of Points, Rates And Fees

11 Jan

Making Sense Of Points, Rates And Fees

You have just found the home of your dreams and the seller has accepted your offer.  Now the fun begins.  You keep hearing terms like “buy down”, “discount points”, “purchase points, but you have no idea what all this means.  Do they all mean the same thing or is each term something different?  This is where your realtor comes in.  Of course you can always call your lender; however, your realtor is the one you have been dealing with and the one that will be more than happy to explain everything to you.

Purchase Points – which are also known as a buy down or discount points.  Points is a term used to define an amount of money given to the lender at closing to lower your interest rate for your mortgage loan.   Every point is equal to one percent of the total amount of your loan.  So if you have a mortgage that is $100,000 then one point would equal $1000.  Every point you buy will lower your interest rate by a certain percentage.   Just remember, the more points you buy, the more money you are going to have to come up with at closing.

The question is – is it smarter to buy points or to hold on to your money?  Well, that depends on how long you plan on staying in that home and of course what you can afford to pay.  If you are planning on staying in this home for more than five years then my advice is for you to buy as many points as you can.  Because this will lower your monthly payments and will save you interest over the life of the loan.

Interest Rates – interest rates fluctuate daily, and when you apply for a loan it doesn’t mean that the rate you were quoted that day is the same rate you will get at closing unless you “lock in” your interest rate.  Locking in your interest rate will give you a guaranteed rate within a specific time frame.  Most lock in periods are for 15, 45 or 60 days.   Keep in mind that the longer you lock in your rate the more it will cost you because a lender takes more of a risk to lock you in for a longer period of time.

Fees – since when have you ever bought anything that did not have some sort of fee associated with it?  Well, a mortgage is no different.   Some of the fees you can expect are:  title fees, underwriting fees, land survey fees,  appraisal fees etc.  Each lender is different and will work your loan differently; some lenders will charge you lower fees but a higher interest rate.

So before you sign on the dotted line, make sure you do your homework and most definitely ask your realtor to let you know who they have had the best experiences with.  Make sure there are no hidden fees and make sure that you fully understand what costs are involved and what your obligations are for the life of your loan.

Having the right real estate agent means having an agent who is committed to helping you buy, sell or rent  your home with the highest level of expertise in your local market. This commitment level has helped me build a remarkable track record of delivering results.

Nothing is more exciting to me than the gratifying feeling I get from helping people meet their real estate needs. You can count on me to always do what’s in your best interest. I pride myself on being honest, trustworthy, and knowledgeable in the real estate market. I know how important it is to find your dream home. Therefore I will make it my responsibility to help you achieve those goals.

Whether you are an experienced investor or a first time buyer, I can help you in finding the property of your dreams. Please feel free to browse my website or let me guide you every step of the way by calling or e-mailing me to set up an appointment today.

About the Author:  Millie Gil has been a successful Licensed Real Estate agent for over 25 years in Florida.  Millie is Vice President of Bold Real Estate Group, a boutique agency committed to concierge personalized service for discerning buyers, sellers and renters of residential and commercial properties.  For more information please forward your request to

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