Subject: What are Mortgage Points and Rebates?

Mortgage Points are finance charges or prepaid interest. One
point is equal to one percent of the loan amount.

The lender who uses the loans interest rate and current market
conditions in concluding the mortgage points due determines
mortgage points. Mortgage points are due at the time of closing.

The more mortgage points you pay the lower your interest rate.

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If you intend to keep your home for a long than three years it is
advisable to pay mortgage points up front to save money with a
lower interest rate if you are able to afford it.

The two biggest benefits of Mortgage Points are as mentioned,
lowering your interest rate and two, mortgage points are tax
deductible.

If you do not intend to stay in the home for more than 2 1/2 years
you may want to check into rebates or negative points.

This is where the mortgage company gives you money for taking a high
interest rate.

Anything past three years though and you are paying a significant
amount of interest and are no longer benefiting from the rebate
because this package is only beneficial for short time owners.

Negative points are used to finance the settlement cost of the
loan process. You cannot use these points as a down payment.

Therefore, you should never agree to a higher interest rate whose
negative points exceed that of your settlement costs.

A disadvantage of negative points is often lenders who sell their
negative points packages through independent mortgage companies.

The loan officers and mortgage brokers of these companies some
times take advantage of the situation and mark up prices for
better commissions.

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Unfortunately it is difficult to identify these discrepancies
because it is hard to track those who are marking up negative points.

Your best bet is to research and educate yourself about current
negative points packages available to you to insure you are getting a
good deal.

Most people however find it to be a great investment to pay mortgage
points to secure a lower interest rate.

The savings produced from this investment gets larger the longer
you stay in the home.

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Thank you,

Max Taylor
http://taylor-marketing.blogspot.com