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regarding points

i want to know how points work excactly when u are looking for intrest rates for fha home loans, i do know u pay but give me an example if it says 5.75 with  1 point how much does that mean i would pay to bring it down to 5.5 it it is one point on a $240,000 home
  • June 02 2009 - South Gate
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Answers (1)

A point is 1% of the loan amount, so it would depend on how much you are putting down as a down payment.

If you put down 20% on $240,000, your loan amount would be $192,000, so 1 point would be $1,920.

Points are prepaid to buy down the rate.  The buy down depends on the lender and the day.  You should make sure it is worth it to pay points and buy down the rate.
  • June 02 2009
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