Era Key Realty Services-Bay State Group
Jeffrey Germagian, Era Key Realty Services-Bay State GroupPhone: (508) 395-0778
Email: [email protected]

Quick basics of mortgage points

by Jeffrey Germagian 11/10/2024

Mortgage points can be a confusing topic, especially if you’re not familiar with them. And while they are hefty in value, the information surrounding them is often overwhelming. So, let’s start with the most basic point: What, exactly, are mortgage points, and why do I need to know about them?

Here’s a quick and simple guide to understanding the “what” and “why” of mortgage points:

What are mortgage points?

When your lender, loan officer or real estate agent brings up mortgage points, it’s best to think of them as discount points. These are typically points, calculated to roughly 1% of your final mortgage, that can be applied to your mortgage interest to bring the overall interest rate down throughout the life of your mortgage loan.

How do mortgage points work?

Mortgage interest rates are typically calculated into your monthly mortgage payment. With mortgage points, you can bring your overall monthly payment down by paying into your interest rates ahead of time.

So, if you have a mortgage of $200,000 with interest rates already calculated in, paying $2,000 up front would grant you a mortgage point, being that it is 1% of your overall mortgage balance.

Why do I need to know about mortgage points?

While it may seem easier to simply pay your monthly payments, and for some it’s the ideal choice, you may want to consider mortgage points if you’re searching within a market with slightly higher interest rates.

Likewise, if you’re planning to stay in your home long enough to watch your prepaid interest pay off in the long term, mortgage points may also be worth investing in.

Mortgage points can raise your overall closing costs by a significant amount. However, based on your unique circumstances, the bulk closing costs may be worth it if you’re interested in decreasing your monthly payments for the overall life of the loan.

Still have questions? Try connecting with your loan officer, lender or real estate agent to help guide you through the process.

About the Author
Author

Jeffrey Germagian

Dating back to the 1970s when his father put him in charge of the family real estate business, Jeffrey Germagian has built a longstanding portfolio of real estate transactions and developments. Along the way, he has grown the family’s original company, then known as Baystate Realty, to the elite status it represents today as ERA Key Realty Services.

Although we’ve expanded our real estate offerings and our branding has evolved to represent all of the real estate services that we provide, ERA Key Realty, The Baystate Group still holds true to the honest business practices and principles that Jeffrey’s father set out with decades ago.

Jeffrey manages the Baystate Group which specializes in traditional home resales, land development, and 55 communities.

He lives in Hopedale, MA, and serves the local towns in the area including most suburbs of Boston as well as southwest of Boston. He is a Certified Residential Specialist and is fully licensed as a real estate agent to practice throughout the entire state of Massachusetts.