Points

Definition

An upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., "3 points" means a charge equal to 3% of the loan balance.

It is common today for lenders to offer a wide range of rate/point combinations, especially on fixed rate mortgages (FRMs), including combinations with negative points.

On a negative point loan the lender contributes cash toward meeting closing costs.

Positive and negative points are sometimes termed "discounts" and "premiums," respectively

Related Terms

Other terms related to 'Points' starting with the letter 'P'

Principal limit, Permanent buydown, PITI, Payment rate, Predatory lending

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