Real Estate

What is the Difference Between Points, Fees and Interest Rate?

Thu May 01, 2008 2:27 pm
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Points are an up-front fee paid to the lender at closing to buy-down your interest rate. Each point is typically equal to one percent of your loan amount. The more you pay in points the more you may be able to buy down your loan rate. However it will cost more money at closing.

The interest rate is the rate a lender charges for allowing you to use their money to buy the home. This rate will determine how much your monthly payment will be. The higher the interest the higher your monthly payment.

There will always be some fees when obtaining a mortgage. These fees cover the cost of processing your loan. Administrative fees commissions etc.

These fees may also include title search fees, property survey appraisal etc.

It is best to discuss these items with both your lender and attorney.

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