Point

One percent of the total loan amount

Loan rate points can be either positive (discount points) or negative (rebate points). The more positive points you choose to pay up-front, the lower your interest rate may be. For every point you pay, your rate will usually go down by about .25%. On the other hand, you can opt for a loan with a higher interest rate in exchange for a rebate, which will give you a credit towards paying some of your non-recurring closing costs, such as title insurance, appraisal and origination fee. You can't get any cash back from rebate points.

Example: How can points affect an 8% loan for $100,000?

" & _

		Points	Interest rate	Pay/receive	Monthly payment
		1.0	7.75%	You pay $1,000 for a lower rate	$719
		0.0	8.00%	You pay $0	$736
		-1.0	8.25%	You receive $1,000 towards closing costs and have a higher interest rate	$753

See Also:	Discount point, Origination fee
More On:	Point

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